Samsung Elec starts 3-nanometre chip production to lure new foundry customers

By Joyce Lee

SEOUL (Reuters) – Samsung Electronics Co Ltd stated on Thursday it has begun mass producing chips with superior 3-nanometre expertise, the primary to take action globally, because it seeks new shoppers to catch far larger rival TSMC in contract chip manufacturing.

In contrast with standard 5-nanometre chips, the newly developed first-gen 3-nanometre course of can scale back energy consumption by as much as 45%, enhance efficiency by 23%, and scale back space by 16%, Samsung stated in a press release.

The South Korean agency didn’t identify shoppers for its newest foundry expertise, which provides made-to-order chips like cell processors and high-performance computing chips, and analysts stated Samsung itself and Chinese language firms are anticipated to be among the many preliminary prospects.

Taiwan Semiconductor Manufacturing Co (TSMC) is the world’s most superior foundry chipmaker and controls about 54% of the worldwide marketplace for contract manufacturing of chips, utilized by companies resembling Apple and Qualcomm which haven’t got their very own semiconductor services.

Samsung, a distant second with a 16.3% market share, based on information supplier TrendForce, introduced a 171 trillion received ($132 billion) funding plan final 12 months to overhaul TSMC because the world’s high logic chipmaker by 2030.

“We are going to proceed energetic innovation in aggressive expertise growth,” stated Siyoung Choi, Head of Foundry Enterprise at Samsung.

Samsung Co-CEO Kyung Kye-hyun stated earlier this 12 months its foundry enterprise would search for new shoppers in China, the place it expects excessive market development, as firms from automakers to equipment items producers rush to safe capability to deal with persistent world chip shortages.

Whereas Samsung is the primary to manufacturing with 3-nanometre chip manufacturing, TSMC is planning 2-nanometre quantity manufacturing in 2025.

Samsung is the market chief in reminiscence chips, but it surely had been outspent by frontrunner TSMC within the extra numerous foundry enterprise, making it troublesome to compete, analysts stated.

“Non-memory is totally different, there’s an excessive amount of selection,” stated Kim Yang-jae, analyst at Daol Funding & Securities.

“There are solely two sorts of reminiscence chips – DRAM and NAND Flash. You possibly can think about one factor, elevate effectivity and make a number of it, however you’ll be able to’t do this with a thousand totally different non-memory chips.”

Samsung’s compound annual development charge (CAGR) of capital spending between 2017 and 2023, which measures how rapidly an organization is rising its funding, is estimated at 7.9%, versus TSMC’s estimated 30.4%, based on Mirae Asset Securities.

Samsung’s efforts to compete with the business chief have additionally been hampered by less-than-expected yields of older chips through the previous 12 months or so, analysts stated. The corporate stated in March that its operations have proven a gradual enchancment.

($1 = 1,292.8900 received)

(Reporting by Joyce Lee; Modifying by Miyoung Kim and Richard Pullin)