Recently, Samsung has been on the industry hot search list, especially the company's number one - Samsung Electronics Vice President Lee Jae-yong - set off on June 7 to visit Europe, visiting the Netherlands, Germany, France for 12 days. This is also his first overseas trip after a gap of six months.
One of the most critical stops on the trip was the Netherlands, as Lee was visiting ASML, based in Eindhoven, to discuss the supply of extreme ultraviolet lithography machines (UV). Lee jae-yong approached ASML to prioritize the supply of EUV lithography machines, and it is estimated that ASML will ship 51 EUV lithography machines this year, of which Samsung Electronics is expected to obtain 18 of them. In the battle for the advanced process market, if Samsung wants to catch up with TSMC, these 18 devices are determined to win, otherwise the gap may become wider and wider.
In the past two years, the global chip shortage has provided excellent business opportunities for the wafer foundry industry. According to Gartner statistics, in 2021, the global wafer foundry capacity utilization rate exceeded 95%, and revenue increased by 31% to reach $100.2 billion, which was also the main driving force for the growth of the entire semiconductor industry last year.
In such a seller's market, foundries have a strong voice and choice, so many customers are scrambling to sign long-term agreements and actively pay advances, which prompts leading foundries to double their capital expenditures and reach record highs in the coming years. TSMC, for example, accounts for 54 percent of the global wafer foundry market share and is expected to invest more than $40 billion in 2022. In such a situation, Samsung, as a catch-up, must further increase its investment to maintain its 18% market share, and then there is hope to further shorten the distance with TSMC.
To this end, in recent years, Samsung has been increasing its investment in the wafer foundry business, and has exploded astronomical figures every year. However, only money is not enough, because Samsung's wafer foundry business is difficult to be completely independent, and it is inextricably linked to other internal businesses, and it is difficult to light up, which makes it obviously inferior in the process of competition with TSMC.
In order to solve this problem, in May 2017, Samsung announced that it would separate the wafer foundry business unit to become a pure wafer foundry company, and plans to obtain a 25% share of the wafer foundry market in the next five years. To enhance its foundry business capabilities, Samsung has set up an R&D center under its Device Solutions Division, which oversees the company's critical chip business. The R&D center incorporates eight of Samsung's research facilities in the Device Solutions division, including memory, system LSI, semiconductors, packaging, LEDs, production technology, software, and display centers.
In recent years, Samsung has made various efforts to further penetrate the wafer foundry business. However, 5 years later, the goal of achieving a 25% wafer foundry market share has not yet been achieved. It seems that it is not just a matter of money, but also many aspects need to be adjusted, including personnel adjustments.
Changes in the top management
In early June, the industry broke the news that there was a large-scale adjustment in the top management of Samsung Electronics, and the local media quoted company sources as saying that the number of executives replaced was about 20, of which Executive Vice President Song Zaihe was appointed as the head of the semiconductor research and development center, which led the development of advanced manufacturing processes and chip products, covering memory and system-on-chip. Previously, Song led a team that specialized in designing NAND flash memory chips. He is known for successfully introducing nand flash vertical architectures.
It is reported that the wafer foundry department will be led by executive vice president Nam Seok-woo, and Nam will also work related to memory chip manufacturing and continue to serve in his current role as general manager of global manufacturing and infrastructure technology.
Kim Hong-sig, executive vice president who previously worked in the memory chip manufacturing division, has been appointed as the head of the wafer foundry technology innovation team, whose key mission is to improve the yield of advanced process chips.
A market analyst said: "In the past few months, Samsung Electronics' production has declined, and its main customers have also left. To that end, Samsung is looking for ways to improve to deal with a range of underperforming situations. ”
Samsung confirmed the personnel change but denied anything to do with business issues.
This is not the first time that Samsung Electronics, especially its wafer foundry business, has made a large-scale high-level adjustment, and Samsung Electronics has replaced many semiconductor executives when faced with major problems with chip yield and customer retention.
The most recent one appeared in 2021, which was also made after the release of Samsung's actual controller Lee Jae-yong, with the goal of reviving the Samsung Group, initiating a major change of blood in the high-level personnel department, and adjusting the executives in an unprecedented way. Among them, Samsung completely replaced the three major business directors of semiconductors, mobile phones and consumer electronics, and merged the mobile phone and consumer electronics businesses, which revealed that the focus of Samsung Group's operations has shifted to semiconductors, which has greatly increased investor confidence. It is particularly noteworthy that eight vice presidents in their forties have been promoted, including Young-su Son (47), vice president of the commodity planning group of the storage division, Seung-cheol Shin (48), vice president of the foundry business unit, and Chan-ik Park (49), vice president of the Americas Vice President of the General Manager of the Americas.
Advanced processes are catching up with TSMC
One of the changes Samsung, including high-level adjustments, is to improve the competitiveness of its foundry business units, especially the progress of advanced processes and the improvement of yields.
Samsung has mass-produced the first batch of the program node is 5nm, in this regard, still lagging behind TSMC, especially in terms of maturity and yield, last year, the Qualcomm Snapdragon 888 using the Samsung 5nm process had overheating problems, and also lost to the performance of Apple's A14 and M1 chips of TSMC's 5nm process.
In terms of 4nm, Samsung announced that 4LPP will meet customer requirements in 2022. Since 4LPP relies on the familiar FinFET, it will be much easier for Samsung's customers to use this node.
Previously, Samsung saw its 4LPE as an evolution of its 7LPP, possibly because 4nm had a very clear PPAc (power, performance, area, cost) advantage over 5nm, or because there were substantial internal variations (e.g., new materials, significantly increased use of extreme ultraviolet lithography, etc.). It is reported that Samsung has increased the production of its 4LPE and 5LPP technologies in 2021, which allows it to provide different PPAc advantages for different chip designs.
In terms of 3nm, Samsung plans to launch 3nm in the first half of 2022, which is basically synchronized with TSMC. At present, Samsung's main customers include Qualcomm, IBM, Nvidia, and their own processor chips, which are also the main customers of the company's 3nm process.
Samsung's 3nm process R&D plan is divided into two phases: the first generation of GAA GAE (GAA-Early) and the second generation of 3nm GAP (GAA-Plus). In 2019, the company said that the 3nmGAE process will launch risk trial production before the end of 2020 and start mass production in 2021, but it has not been seen at present, and the outside world believes that it will be delayed until 2023.
Invest in advanced packaging technology
In addition to advanced processes, Samsung is also catching up with TSMC in terms of advanced packaging technology. Around 2018, in order to regain the integrated Fan-Out package (Integrated Fan-Out) by TSMC; InFO) binding Apple's iPhone application processor orders lost by wafer foundry advanced processes, Samsung Motor's heavy investment in Panel-level Fan-Level Packaging;500; FOPLP) technology.
After investing heavily in the development of FOPLP, Samsung has mass-produced ADVANCED PACKAGING TECHNOLOGIES OF FOPLP-PoP and I-Cube 2.5D that can compete with InFO and CoWoS packages.
However, FOPLP still faces no small challenges, in the current situation of FOPLP, the scale of production will be the biggest challenge to the popularization of technology, in the initial yield is not good enough, FOPLP production capacity to achieve the ideal cost advantage, in the short term may not be easy to achieve.
In addition, FOPLP fineness is not easy to improve, which is why Samsung first cut into the relatively low-end wearable device AP, but also difficult to obtain high-end smartphone orders, in the face of future efficient computing needs, including AP, artificial intelligence chips, GPU, ASIC or FPGA chips, I am afraid that it is impossible to use the current FOPLP equipment mass production, and FOPLP also has warpage (warpage) and other issues to be solved.
FOPLP process equipment investment is risky, but also a big challenge, because FOPLP can not continue to use the existing panel or wafer manufacturing equipment, most manufacturers must be new process production equipment, the cost is quite high, if the amount is not large enough, will not be able to support the cost, investment recovery will be quite difficult.
Compete for customers
Samsung's main customers Qualcomm, Nvidia and Tesla rely on the company to produce 8nm and 14nm chips, and in the past two years, with advanced processes such as 5nm, Samsung has won new orders for Qualcomm's Snapdragon 888 series, as well as new orders for Nvidia's Ampere and GeForce chips.
According to DigiTimes, the number of Samsung wafer foundry customers has exceeded 100. From the current situation, the wafer foundry market is still hot in 2022, and Samsung will blossom more and develop in an all-round way. Samsung is still in its infancy in chip manufacturing in the field of automotive and artificial intelligence at this stage, which will be the key to whether its future wafer foundry can continue to grow.
Since Samsung separated its wafer foundry business in 2017, it has grown from the earliest 30 customers to more than 100. Samsung is said to have reached more than 300 customers by 2026. TSMC is expected to have more than 500 customers in 2022, five times that of Samsung.
Statistics show that in 2020, Samsung will use 60% of its wafer foundry capacity internally, mainly for exynos chips for smartphones, and the rest of the capacity will be divided by several major customers, including: Qualcomm (20%), Nvidia, IBM and Intel share another 20%. As Samsung increases its production of 7nm and more advanced process chips in 2021, the proportion of self-use capacity has dropped to about 50%. However, this is still a large proportion, and Samsung still has a long way to go compared to TSMC's 100% capacity to serve its customers.
epilogue
According to Gartner's report, Samsung raised its wafer price by 20% at the end of 2021 after TSMC announced a price increase. Recently, with the rise in TSMC's foundry price, Samsung has also raised its offer. In mid-May, according to people familiar with the matter, Samsung's chip foundry price may rise by 15% to 20%. People familiar with the matter said that the new pricing will be implemented from the second half of this year, and Samsung has completed negotiations with some customers and is discussing with other customers.
The rising tide and the shortage of global chips have given Samsung the opportunity to compete for more customers. However, the price increase behind TSMC still reflects some helplessness of Samsung, because after the fab foundries such as UMC and SMIC announced price increases, they did not hear the news of Samsung's follow-up price increase, because it would weaken Samsung's price advantage over TSMC. Only when TSMC increased prices, Samsung dared to follow up.
As an "independent" business unit, Samsung Wafer Foundry has entered its 6th year, but its yield is still lower than that of major rival TSMC. From this point of view, the South Korean semiconductor giant still needs to continue to invest and improve its production line, while further sorting out the internal management system, in order to achieve the goal of surpassing its opponents by 2030.