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Nvidia to Produce Next-generation GPUs through Samsung’s 7-nm EUV Process
A Major Deal for Samsung's Foundry Business
Nvidia to Produce Next-generation GPUs through Samsung’s 7-nm EUV Process
  • By Kim Eun-jin
  • June 10, 2019, 10:47
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Nvidia will produce its first 7-nm graphics processing units (GPUs) using Samsung Electronics’ extreme ultra-violet (EUV) processes.

Nvidia, the world's second-largest semiconductor design company, will produce its next-generation graphics processing units (GPUs) using Samsung Electronics’ 7 nanometer (NM) extreme ultra-violet (EUV) processes. Industry experts say that it is very symbolic that Nvidia joins hands with Samsung Electronics instead of Taiwan’s TSMC, the world's number one foundry company and a long-standing partner of Nvidia.

Nvidia will entrust the production of its next-generation GPU Ampere, which will be launched next year, to Samsung Electronics, foreign news outlets and industry sources said on June 6. The Ampere is Nvidia's first 7-nm product. At the moment, the company is producing 12-nm GPUs. Nvidia was expected to use TSMC to produce its first 7-nm product, but contrary to expectations, it decided to partner with Samsung Electronics.

Nvidia is the world's second-largest fabless company with revenues reaching US$10.39 billion in 2018. This deal with Nvidia is expected to make it easier for Samsung Electronics to secure large customers in the future. GPUs are Nvidia's flagship product and are used for the 5G mobile telecommunications, AI, and autonomous vehicles.

Taiwan-based media outlets, however, downplayed the significance of the deal, saying that Nvidia chose Samsung because TSMC's 7-nm production lines have reached their full capacities.

A notable fact is that Samsung Electronics is focusing on securing customers rather than earning profits. "The semiconductor industry has doubts about the yield of Samsung’s 7-nm EUV process, but the price Samsung has offered to Nvidia was enough to offset this matter," they added.

Nvidia urgently needed a foundry that can produce 7-nm chips at a low cost. One reason is that its rival AMD has already launched a 7-nm GPU. More importantly, cost-cutting has become important because of a recession in the cryptocurrency mining market, which drove its sales last year. Moreover, Samsung was an attractive option as the Korean semiconductor giant had produced Nvidia's GTX 1050 series, Tegra and Pascal architecture-based chips through 14-nm processes in the past.

Industry watchers are closely monitoring Samsung's order-taking strategy. Recently, Samsung’s foundry division announced that it offered some startups an exceptional full-mask set price which was 60 percent of that of TSMC. Samsung's full-mask set was cheaper than the multi-layer mask (MLM) set introduced by TSMC to reduce costs in producing small quantities of products. Masks are a kind of film used to draw circuits on wafers.

Unlike Samsung’s foundry division which has secured Nvidia, a huge customer, TSMC is facing a tricky situation due to the U.S.-China trade dispute. TSMC manufacturers chips for Huawei's semiconductor design subsidiary, HiSilicon. The U.S. government’s sanctions on Huawei prompted major global companies to stop trade with Huawei, but TSMC recently announced that it will continue its partnership with Huawei.

The U.S. Department of Commerce has been putting pressure on TSMC. It recently dispatched its staff to the TSMC headquarters and conducted an investigation. Under pressure, Huawei has been reducing production volume for TSMC. The Nikkei Asian Review reported that Huawei's orders to TSMC fell by nearly 30 percent.

Meanwhile, major corporate customers of Samsung’s foundry division are all U.S. companies including Nvidia, Qualcomm and IBM. This means that there is a relatively little possibility of Samsung’s foundry division being hit hard by the U.S.-China trade dispute.