Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC) are competing desperately to preoccupy the next-generation semiconductor foundry market. Both companies said they would start 10 nm-process foundry production within the year and they are increasing the investment to speed up the introduction of 7-nm process, which is considered the final battlefield.
According to industry sources on May 16, Samsung Electronics recently purchased an extreme ultraviolet (EUV) equipment from ASML, a Dutch-based semiconductor equipment producer. The EUV equipment will be deployed in the foundry mass production line as early as the end of next year after testing its mass productivity in the R&D line first.
However, it is still unclear whether the company will be able to apply the equipment in its mass production line. Although the EUV equipment was considered the last resort to break through the limit of fine process, it only verified its mass productivity in theory and there is no actual application cases. Its high price of 100 billion won (US$84.93 million) per unit is also a burden on a company.
However, Samsung Electronics and TSMC are still seeking to develop the 7-nm technology because they believe that the 10-nm process, which is the next-generation of the existing advanced 14-nm process, will not last long. In fact, the 10-nm process has 20 percent higher performance than the 14-nm process. On the other hand, the 7-nm process has 35 percent higher performance and 65 percent higher power efficiency.
The semiconductor industry expects that Samsung Electronics and TSMC will spend more than 300 billion own (US$254.78 million) for design alone which is needed to develop the 7-nm foundry technology.
An official from the industry said, “The design costs for the 7-nm process are at least nine times higher than that of the 28-nm process which is the most common. The 10-nm process takes relatively low investment costs but there are not much improvements as the next-generation of the 14-nm process.”
However, Intel, the first company to unveil the cutting-edge technology until the 14-nm process, plans to slow down the conversion speed of fine process. The company aims to introduce the 10-nm process by 2018 so it will fall behind Samsung Electronics and TSMC by one generation. The company’s current conservative keynote, which conducts an aggressive restructuring and business structure adjustment, affected the investment in fine process conversion, according to market industry sources.
All eyes are also on the competitive landscape between Samsung Electronics and TSMC which have been competing to supply application processors to Apple for years.
According to foreign media reports and industry sources, Samsung, which supplied much more products to Apple with the 14-nm process than TSMC, is in a disadvantageous position in orders for the iPhone 7 than TSMC, which has succeeded in stabilizing the 10-nm process.
An official from a market research firm IHS said, “TSMC is a dedicated semiconductor foundry so its price competitiveness is structurally better than Samsung Electronics. TSMC is highly likely to win in the supply competition but Samsung Electronics, which has high production stability, has an advantage in the state-of-the-art process.”