Nvidia Chooses Samsung over TSMC
Samsung Electronics will produce the latest GPU for Nvidia. The U.S. company, which leads the global GPU market, has thus far outsourced GPU production to Taiwan's foundry company TSMC. But this time, it has chosen Samsung Electronics as its business partner.
Nvidia unveiled its next-generation GPU GeForce RTX 30 Series on Sept. 1 (local time), announcing that Samsung Electronics will produce the new product using a 8-nm foundry process.
Nvidia has thus far relied on TSMC for production of its mainstay products, using Samsung Electronics for production of only some low-priced products.
The order from Nvidia follows a recent contract with IBM for production of CPUs for next-generation servers. It will help Samsung Electronics expand foundry sales in the third quarter of this year and reduce its market share gap with TSMC. Nvidia’s order volume is large in itself and will help Samsung Electronics win orders from big customers such as AMD and Intel.
Initially, many experts predicted that TSMC would be chosen to produce Nvidia's next-generation GeForce RTX 30 GPU Series. But Nvidia chose Samsung Electronics, and analysts believe its decision took into consideration Samsung's competitiveness in semiconductor micro-fabrication and price.
Nvidia's next-generation GPU offers a performance double the level of its previous products, but its price has not been raised. This is because the new product is made through an 8-nm process that does not require high-priced extreme ultraviolet (EUV) facilities. TSMC and Samsung Electronics are the only two companies in the world that can make under-7-nm semiconductor products, and only Samsung Electronics can implement an 8-nm process.
Experts forecast that Samsung Electronics will be able to quickly narrow its gap with TSMC by securing a big order from Nvidia. Samsung Electronics signed a contract to produce IBM's Power 10, a CPU for next-generation servers, in August. In February, it agreed to produce Qualcomm's new 5G mobile communication modem chip X60. Nvidia, Qualcomm and IBM are huge customers that can determine the future of the foundry market. The fact that these companies are placing big orders on Samsung Electronics is interpreted as a move to secure a leverage in price negotiations with TSMC.