The chip foundry pattern is changing, and TSMC and Huawei are working together to balance Samsung
Semiconductor chips are the heart of the modern technology industry, and the strength of foundries directly determines the performance and competitiveness of downstream products. In this fierce chip foundry war, TSMC and Huawei worked together, which made Samsung, which has always regarded TSMC as a "thorn in the side", fall into a passive predicament.
TSMC occupies the commanding heights with its leading technology
As the world's largest professional chip foundry, TSMC is a leader in advanced process technology. According to statistics, TSMC's production capacity is about 5.5 times that of Samsung in the 7nm process, and 3.4 times that of Samsung in the 5nm process. In addition to the production capacity advantage, TSMC is also ahead of Samsung in terms of technical level.
While Samsung's 7nm process uses EUV lithography technology, TSMC's N7+ process achieves higher transistor density and better process performance through 4-layer EUV exposure. This gives TSMC a clear advantage in smartphone chips, high-performance computing chips and other fields.
Huawei's chip "PlayerUnknown's Battlegrounds" pinned its hopes on TSMC
Samsung, once seen as a potential partner, ultimately refused to work with Huawei, perhaps under pressure from the U.S. government. In this case, Huawei can only rely on TSMC and invest a large order of $700 million to ensure the supply of chips.
Samsung is passive in the advanced process foundry market
Under the attack of TSMC and Huawei, Samsung has fallen into a passive situation in the advanced process chip foundry market. As the world's largest chip foundry, Samsung has always regarded TSMC as its biggest competitor, but it is currently significantly behind in the key 7nm and 5nm processes.
Market share has declined significantly
Data shows that in 2021, Samsung's share of the global chip foundry market will only be 17.4%, far behind TSMC's 54.5%. In the important field of smartphone chips, Samsung has been hit hard, and major customers such as Qualcomm and Apple have transferred orders to TSMC.
Capacity utilization is low
Due to insufficient capacity utilization, Samsung's chip factory in Pyeongtaek was once exposed to the news that it would lay off 1,000 employees. Even in the domestic market, Samsung is facing increasing competitive pressure and has to maintain orders through price cuts and other means.
The pace of technological innovation has slowed
When it comes to technological innovation, Samsung also seems to have slowed down. The 3nm process chip, which was originally scheduled for mass production in 2022, has been repeatedly postponed, and it is expected that mass production will not be achieved until the second half of 2024 at the earliest. Both TSMC and Intel's 3nm processes have entered the risk production stage.
Samsung is stepping up its response
In the face of severe challenges from TSMC and Huawei, Samsung is stepping up to respond. On the one hand, Samsung is vigorously expanding its production capacity, and the new chip factory planned to be completed in 2023 will focus on the production of chip products with 3nm and below processes.
On the other hand, Samsung is also increasing R&D investment, trying to catch up with TSMC in the future 2nm or even more advanced process. However, to achieve overtaking is not achieved overnight, and Samsung needs to hold on for a long period of time in the future.
Can Samsung regain its strength?
In this chip foundry war, Samsung is undoubtedly in a passive predicament. But as a global tech giant, Samsung will never back down, and future counterattacks are expected.
Increase investment and strive for the commanding heights
At present, Samsung is increasing investment and trying to catch up with TSMC in the future 2nm or even more advanced process. Samsung plans to invest about $230 billion in the chip business by 2030 to ensure it remains ahead of the curve in key technologies.
Collaborate with potential partners
In addition to its own efforts, Samsung is also actively seeking potential partners. It is reported that Samsung is cooperating with IBM, Qualcomm and other companies on the research and development of 3nm and below processes. By integrating the resources of all parties, Samsung is expected to shorten the technology gap with TSMC.
Target emerging market opportunities
Another direction that deserves Samsung's attention is emerging markets. With the rapid development of emerging technologies such as artificial intelligence, Internet of Things, and autonomous driving, the demand for high-performance chips will increase day by day. If Samsung can seize this opportunity and gain a foothold in emerging markets, it will be expected to regain the initiative.
Although Samsung's current situation in the advanced process chip foundry market is difficult, it is by no means irreversible. As long as it maintains its concentration and increases investment, Samsung is fully expected to regain its strength in the future and regain its favorable position in this chip foundry war.