TSMC Continuing to Outperform Samsung Electronics in Foundry Market

Samsung Electronics is having a hard time catching up with TSMC in the foundry market although the former is introducing cutting-edge microfabrication process technologies such as high-k metal gate, FinFET, gate-all-around and multi-bridge-channel FET.

Market research firm TrendForce said on Dec. 14 that Samsung Electronics’ global foundry market share fell from 19.1 percent to 17.8 percent from the first quarter to the fourth quarter of this year whereas TSMC’s rose from 48.1 percent to 52.7 percent during the same period. This is because TSMC is producing chips for Qualcomm, Nvidia and AMD and leading smartphone manufacturers such as Huawei and Apple are working very closely with TSMC.

The decades-long partnership between TSMC and major fabless companies is hard to break although Samsung Electronics is expanding its client base by producing IBM’s mainframe CPUs and Qualcomm’s less expensive mobile application processors. Samsung Electronics unveiled the Samsung Advanced Foundry Ecosystem, a foundry ecosystem program, last year to expand its ecosystem, and yet it is hard to find a global fabless company in South Korea and Samsung Electronics is experiencing difficulties doing business with large corporations such as Apple and Qualcomm as microfabrication product clients.

In the meantime, TSMC 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 Taiwanese 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, 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.

Meanwhile, Samsung Electronics is facing a series of challenges in trying to overtake TSMC. 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. In the memory chip market, Samsung Electronics achieved success by promptly supplying high-quality products based on an economy of scale and cost reduction. Unfortunately for Samsung Electronics, this strategy is not working in the foundry market.