Foundry Market Competition Intensifying Between TSMC and Samsung Electronics

TSMC is planning to keep dominating the global foundry market by starting volume production of 3-nm products in 2022. Samsung Electronics, the runner-up in the market, is aiming to overtake TSMC in 2030 with its extreme ultraviolet (EUV) lithography technology.

The Taiwanese company said on Dec. 5 that it would begin to supply 5-nm process-based chips in the first half of next year and start the mass production of 3-nm process chips in 2022. The company is expected to produce 2-nm process products in 2024.

Regarding the EUV lithography process that Samsung Electronics employed ahead of anyone else in the industry, TSMC stressed that it would become the world’s first semiconductor company to manufacture chips by using the process. TSMC is currently building a 3-nm technology research center in Hsinchu, Taiwan and the research center is scheduled to open in 2021. The company’s capital expenditures for next year are estimated at US$14 billion to US$15 billion, close to those for this year.

TSMC is further refining its technology by purchasing a large amount of EUV exposure equipment from ASML. In the third quarter of this year, Taiwanese clients accounted for no less than 54 percent of the Dutch company’s sales by purchasing EUV lithography equipment, priced at 150 billion won to 200 billion won per unit, in quantity. In that quarter, Taiwan’s semiconductor equipment investment totaled US$3.9 billion, up 34 percent from a year earlier, whereas South Korea’s semiconductor equipment investment fell 36 percent year on year to US$2.2 billion. TSMC is not neglecting relatively cheaper products, either. The company is expanding the monthly capacity of its 16-nm chip production lines located in Nanjing, China from 10,000 units to 15,000 units on a 12-inch wafer basis.

In the meantime, Samsung Electronics’ global foundry market share is yet to reach 20 percent. According to market research firm TrendForce, the share was 7.3 percent in 2017, 14.9 percent in 2018, 19.1 percent in the first quarter of this year, and 18.5 percent in the third quarter of this year. At present, Samsung Electronics is producing Snapdragon 765 and 765G processors, which are Qualcomm’s non-flagship mobile application processors, while TSMC is producing flagship Snapdragon 865.

Samsung Electronics is facing a series of challenges. For example, the supply of photoresists for EUV lithography purposes can be subject to Japan’s export restrictions at any time. Besides, a large number of companies are trying to hold in check Samsung Electronics, which is a leading semiconductor company and the world’s largest smartphone manufacturer, and Chinese and Taiwanese semiconductor companies are increasingly collaborating with each other. Under the circumstances, Samsung Electronics has unveiled a series of new microfabrication techniques such as FinFET, gate-all-around and multi-bridge-channel FET.