Samsung Electronics announced on April 16 that it has succeeded in developing a 5-nanometer (nm) process that can enhance logic density and performance of processors compared with the current 7-nm process.
The company also announced that it would start within this month mass production of chips using a 7-nm manufacturing process based on extreme ultra-violet (EUV) lithography, the first time in the global semiconductor industry.
Samsung’s announcement came following the release of 5-nm design infrastructure by TSMC, the world’s No. 1 player in the foundry business, earlier this month.
TSMC released the complete version of its 5-nanometer design infrastructure, providing a wide variety of resources required for design work, including technology files, process design kits, tools, flows and IP.
The release enables semiconductor design companies to start working on the components of their chips. TSMC is already working to perfect the 5-nm manufacturing process, although it is unknown when it goes into operation. Market analysts speculate that the new process could be used to producing Apple’s “A14” system-on-chip for the 2020 edition of the iPhones.
TSMC’s release of the 5-nm design infrastructure must have prompted Samsung Electronics to speed up the development of a 5-nm process. The 5-nm process can reduce logic area by 25 percent compared to the current 7-nano process by optimizing cell design and improves power efficiency by 20 percent and performance by 10 percent.
In terms of processing technology, Samsung Electronics has managed to catch up with industry leader TSMC, as its development of a 5-nm process was virtually simultaneous with that of TSMC.
Now, the primary task for Samsung Electronics is to attract customers who would use its new EUV-based 7-nm production line, which will go into full operation from 2020. It needs to secure enough orders from customers before the new line starts full operation. Major potential customers include Qualcomm and NVIDIA of the U.S., as well as IBM and Apple.
To secure customers, Samsung Electronics has delivered detailed specifications of its 5-nano process to potential clients, including Intel and Apple. Previously, Apple used a multivendor strategy and placed orders on both TSMC and Samsung Electronics. Yet Apple has been relying exclusively on TSMC for production of its application processors starting from the iPhone 8. Samsung is looking to change Apple’s strategy. Recently, Apple is facing a shortage of 5G modem chips due to its legal battle with Qualcomm, and Samsung Electronics has been mentioned as a candidate for Apple's 5G modem chip design and production.
Late last year, Samsung managed to win orders from IBM for production of high-performance CPUs for servers. The deal was meaningful for Samsung. At the time, the company said the deal would be an important milestone that symbolizes the foundry business department's confidence in the EUV process. However, IBM's order was largely due to the failure of U.S.-based GlobalFoundry, which has produced IBM's products, to develop a 7-nm EUV process.
The GlobalFoundry’s case illustrates the high barrier for the 7-nm process. Currently only TSMC, which is ranked first, and Samsung Electronics, which is ranked second, are able to produce EUV-based 7-nano chips.
Samsung’s new EUV process helped it narrow its market share gap with TSMC. According to market research company TrendForce, Samsung took up 19.1 percent of the global foundry market in the first quarter of this year, up nearly 12 percentage points from 7.4 percent in the first half of last year. During the same period, TSMC saw its market share drop 8 percentage points to 48.1 percent from 56.1 percent.
The intensifying competition between the two industry leaders is forcing them to shift toward a next-generation manufacturing process earlier than expected. Although mass production of chips using the 7-nm process has barely started, they are hurrying to shift toward the 5-nm process. Samsung Electronics is determined to overtake TSMC in this new round of technological competition.
Samsung Electronics vice chairman Lee Jae-yong has been emphasizing investment in non-memory semiconductors since early this year because he wants to reduce reliance on memory semiconductors. Non-memory semiconductor market is twice that of memory semiconductors.
The government has also expressed its willingness to foster non-memory semiconductors as the Korean economy is too dependent on memory semiconductor exports.