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Samsung Foundry to Benefit from Competitor TSMC

Samsung Electronics’ global share of foundries declines
The gap with TSMC in Taiwan widens by 36.0 percentage points
TSMC aggressively invests in US, Japan, etc.
TSMC’s price hike is an opportunity for Samsung Electronics

Samsung Electronics Hwaseong Foundry Semiconductor Factory

The global market share of Samsung Electronics’ semiconductor foundries (consignment production) is declining. The industry is giving an analysis that it is a crisis of Samsung Electronics’ foundry. It is evaluated that Samsung Electronics is losing its place due to the aggressive investment of Taiwanese TSMC, the world’s number one foundry. In fact, TSMC continued its astronomical investments in Japan, the US and Europe this year. It is known that they have a strong will to bring down Samsung Electronics, which has been terribly chasing after them.
However, some analysts say that Samsung Electronics’ foundries should be alert, but there are still opportunities. It is explained that an increase in TSMC’s ransom price may rather act as a burden on its customers.

Samsung Electronics’ foundry share declines

TrendForce, a Taiwanese market research firm, recently reported that the top 10 companies that account for 97% of the global foundry market’s sales in the third quarter of this year increased by 11.8% from the previous quarter to $27.277 billion (about 32.64 trillion won). announced.

TrendForce said, “Although the number of special cases due to COVID-19 has decreased due to the rise in the vaccination rate, the number of foundry orders has increased due to the entry of the smartphone peak season. has been renewed,” he analyzed.
Samsung Electronics’ foundry sales also increased by about 11% from the second quarter to $4.81 billion (about 5.65 trillion won), taking second place after TSMC. However, Samsung Electronics’ foundry’s share fell 0.2 percentage points from 17.3% in the second quarter to 17.1% in the third quarter.
The gap with TSMC has widened that much. The market share gap between TSMC and Samsung Electronics widened from 35.6 percentage points in the second quarter of this year to 36.0 percentage points in the third quarter.

TSMC soars in ransom

Samsung Electronics Vice Chairman Lee Jae-yong is returning home from the Gimpo Business Aviation Center in Seoul after a 10-day business trip to the United States on the afternoon of November 24.  Samsung Electronics made the final announcement on the same day that it would build a 20 trillion won (US$20 billion) foundry (semiconductor consignment production) factory in Taylor City, Texas.

Samsung Electronics Vice Chairman Lee Jae-yong is returning home from the Gimpo Business Aviation Center in Seoul after a 10-day business trip to the United States on the afternoon of November 24. Samsung Electronics made the final announcement on the same day that it would build a 20 trillion won (US$20 billion) foundry (semiconductor consignment production) factory in Taylor City, Texas.

In the semiconductor industry, the widening gap between Samsung Electronics and TSMC is interpreted to mean that TSMC is making aggressive investments. TSMC is increasing its production line with the full support of the US and Japanese governments. This is because the governments of both countries are working hard to attract semiconductor manufacturing facilities, fearing the economic damage caused by semiconductor shortage for vehicles.

TSMC is building a new foundry plant in Arizona, USA by investing $12 billion (about 14 trillion won) ahead of Samsung Electronics. In Japan, together with Sony, it is scheduled to start mass production before the end of 2024, starting next year in Kumamoto Prefecture, Japan, to build 22 nm (nanometer, 1 nm is 1 billionth of a meter) and 28 nm semiconductor factories. It was decided to establish 7nm and 28nm wafer factories in Kaohsiung, southern Taiwan.

Samsung Electronics is also continuing its investment. Recently, it was decided to build a new foundry in Taylor City, Texas, at an investment of $17 billion (about 20 trillion won). The Taylor plant uses advanced foundry processes. Advanced system semiconductors used in fifth-generation mobile communication (5G), high-performance computing (HPC), and artificial intelligence (AI) will be produced.

However, there are analyzes that Samsung Electronics is still behind TSMC in terms of securing customers. Foundries will sign contracts for products that will be produced in two to three years at most, but it is predicted that negotiations between Samsung Electronics and global customers, where Samsung Electronics Vice Chairman Lee Jae-yong is in custody, would have been difficult to proceed properly.

The shortage of supply and demand centering on automotive semiconductors is also unfavorable to Samsung Electronics. Samsung Electronics’ foundry mainly produces system semiconductors for servers and smartphone APs. On the other hand, TSMC’s product lineup includes automotive semiconductors. An industry insider analyzed, “As the demand from global automakers concentrated on TSMC, the market share gap would have widened further.”

TSMC price hike, Samsung may suffer from reflection effect

Will Samsung Foundry Benefit from Competitor TSMC?[박신영의 일렉트로맨]

Some are even claiming that there is still an opportunity for Samsung Electronics. This is because TSMC recently notified customers of a price increase of up to 20%. TSMC has already raised prices by more than 10% from last fall to this spring. Although the industry highly appreciates TSMC’s technology and production capacity, it is known that customers are dissatisfied with raising the price by 20%.

Another dissatisfaction is that the range of raises varies by customer company. In the case of Apple, the largest customer, the increase is less than 5%, but it is said that they are raising prices relatively larger for small and medium-sized fabless (semiconductor design companies) or companies with small market influence.

It is known that some companies dissatisfied with TSMC’s pricing policy are turning to Samsung Electronics’ foundries. An industry official said, “Since Samsung Electronics’ foundry technology does not lag behind TSMC, customers have no choice but to look for Samsung Electronics.”

However, smartphone makers and home appliance makers may be reluctant to entrust semiconductor manufacturing to Samsung Electronics’ foundries. It is because the semiconductor blueprint must be disclosed to Samsung Electronics, and the product strategy in the future is inevitably exposed. A semiconductor industry official said, “In order to earn the trust of customers, Samsung Electronics’ foundries have no choice but to build up a stable manufacturing history.

Reporter Park Shin-young [email protected]

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