TSMC to Make LG's Smartphone Microprocessor

Taiwan Semiconductor Manufacturing, which has boosted its profile in the chip-manufacturing industry by inking deals with Apple, has added LG Electronics to its list of customers for the high-tech chipsets used in smartphones.

LG Electronics said Friday it has developed its own microprocessor to power a variation of its flagship G3 smartphone -- a first for the South Korean electronics giant. Thus far, LG has relied mainly on Qualcomm for the chips that run its smartphones.

"The chips will be made by TSMC, as LG doesn't have chip factories," said a person familiar with the matter. He said LG and TSMC have been working together for months to develop the new chipset, dubbed Nuclun, but didn't provide further details.

Specifications for the Nuclun aren't quite at top-notch level, but they are similar to the chips that power other premium smartphones, according to LG. For example, one version of Samsung Electronics's Galaxy Note 4 smartphone comes with a mobile processor similar in structure to the Nuclun, just slightly faster.

With the new push into chip development, LG said it was aiming to further diversify its product strategy against stronger competition. Following a period of losses, LG's mobile unit has been in recovery in recent months thanks to a better-than-expected reception for the company's G3 model, which was launched earlier this year. The company is scheduled to release its third quarter results next week.

"Nuclun will give us greater flexibility in our mobile strategy going forward," Park Jong-seok, the head of LG's mobile business, said in a statement.

But it's too early to tell if LG's internally-developed chipsets will bring the company success. Making the right microprocessor has been a challenge even for Samsung, which has a long history of expertise in chip making, analysts say. Samsung-branded mobile processors, called the Exynos series, haven't been a popular choice, even for its Galaxy lineup of smartphones.

LG used to have its own chip business, but divested the division in the wake of the Asian financial crisis in the late 1990s as a part of a broad restructuring of the country's conglomerates.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires