Taiwan's TSMC, the leader in the semiconductor foundry industry, recorded a market share of 48.1 percent in the first quarter of this year. It was a 2.7 percentage points drop from last year and TSMC’s lowest market share since 45.6 percent in 2012. On the other hand, Samsung Electronics increased its market share by 4 percentage points during the three months to 19.1 percent. The semiconductor market is closely monitoring TSMC's downturn as it comes amid Samsung Electronics' strong push based on its competitive edge in the extreme ultraviolet (EUV) process.
The Taiwanese foundry giant recorded a 48.1 percent market share with sales of US$7 billion in the first quarter of 2019, according to Taiwanese market research firm TrendForce on March 27. The company was followed by Samsung Electronics with US$2.8 billion (19.1 percent), GlobalFoundries with US$1.2 billion (8.4 percent), UMC with US$1.1 billion (7.2 percent) and SMIC with US$600 million (4.5 percent). High ranking companies all suffered a drop in sales, including TSMC (minus 17.8 percent) and Samsung Electronics (minus 14.4 percent), due to a decline in demand from the smartphone industry and a slump in the cryptocurrency market.
A change in market shares is highly noticeable. Compared with the end of last year, TSMC’s market share declined from 50.8 percent to 48.1 percent, while that of Samsung Electronics rose from 14.9 percent to 19.1 percent. TSMC's market share was 54 percent in 2014, 52.7 percent in 2015, 50.5 percent in 2016, 49.7 percent in 2017 and 50.8 percent in 2018. The company’s market share stood above 50 percent in recent years except for 2017. In particular, its market share of 48.1 percent in 2019 is the lowest in seven years.
This result is associated with Samsung Electronics's aggressive move to strengthen its non-memory business. Samsung Electronics recently succeeded in supplying automotive semiconductors to Audi and semiconductors for servers to IBM. In 2017, Samsung Electronics spun off its foundry business team from the System LSI Business Division. Since then, its customers have been diversified.
In particular, 7 nanometer (nm) EUV micro-processing was applied to server semiconductors supplied to IBM. Both Samsung Electronics and TSMC are now producing 8 nm products with immersion argon fluoride (ArF) equipment.
However, Samsung Electronics is ahead of TSMC as it is the only chipmaker using EUV equipment in the 7 nm process, experts say. "Samsung Electronics plans to make 7 nm products through the EUV process in the second half of this year, while TSMC will continue to make 7 nm products through the ArF process. TSMC plans to use the EUV process for production of 5nm products starting next year," an industry analyst said. “TSMC may have delayed the introduction of EUV equipment to accumulate experience with EUV technology but market assessment is favorable toward Samsung Electronics’ technology."
TSMC's frequent accidents are playing out in favor of Samsung Electronics. Since the second half of last year, TSMC has been suffering from accidents and embarrassing events such as the infection of production equipment with malicious computer virus ransomware, the disposal of wafers due to defects and the death of workers at the construction site for a 5 nm process line. As for wafer disposal, fabs produce 12 nm and 16 nm central processing units (CPUs) and graphics processing units (GPUs) for Nvidia, AMD, Huawei and MediaTek with wafers from TSMC. This fact will damage TSMC’s reputation.
Some experts also predict that Samsung Electronics will achieve a 25 percent share earlier than targeted 2023. "No one can deny that TSMC is the foundry leader in the world at the moment," an industry official said. “However, a series of missteps by TSMC may be the starting point of a change in the market in connection with Samsung Electronics’s fever pitch in the non-memory sector."