Outsourcing Again Soon
Recently, Samsung Electronics has improved its process yield (the ratio of good products) to over 75% for its 4-nm process, leading to speculation that it could expand its major clients for semiconductor foundry (contract manufacturing).
On July 11, Park Sang-wook, a researcher at Hi Investment & Securities, said in a foundry report, “Samsung Electronics has recently been successful in improving the yield process for 4 nanometer,” and “The possibility of Qualcomm and Nvidia once again outsourcing production through Samsung Electronics Foundry has increased.”
Previously, Samsung Electronics Foundry experienced delayed product launches and slow improvements in yield from processes under 10 nanometers, which led major clients to switch to TSMC. Furthermore, Qualcomm and Apple, who are in a competitive relationship with Samsung Electronics System Semiconductor and Mobile Business Department, were even more challenging to attract.
As a result, last year’s Capital Expenditure (CAPEX) and production capacity (CAPA) of TSMC were 3.4 and 3.3 times that of Samsung Electronics Foundry business, respectively. In the case of ultrafine processes under 7 nanometers, TSMC’s market share was 90%, widening the gap between the two companies even more.
However, this year it is estimated that the yield of Samsung Electronics Foundry will be over 75% for 4-nanometer processes and over 60% for 3-nanometer processes, which brings optimism that they could recapture clients lost to TSMC.
The downturn in business conditions was seen as an opportunity for Samsung to improve its yield. The factory operating rate decreased, leading to an increase in test wafer input, which helped improve the yield of ultrafine processes under 7 nanometers in the foundry.
In addition, as TSMC increased order prices, major clients like Qualcomm and Nvidia reportedly felt the need to diversify their production outsourcing.