Samsung Needs to Improve Yield
As TSMC’s micro-fabrication lines are overloaded with orders, Samsung Electronics is likely to see an increase in order intake. As Apple has virtually monopolized TSMC's 5-nm process, other fabless companies are knocking on the door of Samsung Electronics.
TSMC accounted for 54 percent of the global foundry market against Samsung Electronics’ 17 percent in 2020. Among global foundry companies, the two alone can mass-produce 10 nm or smaller products. Due to this situation, it is not easy for TSMC alone to handle the demand for semiconductors from ICT companies.
Until now, many foundry orders have been awarded to TSMC, which sticks to its business motto of "not competing with customers." But as TSMC is unable to meet growing orders, its clients have no choice but to choose other options.
Unlike TSMC which specializes in foundry services only, Samsung Electronics is a general semiconductor company which produces a wide range of products and has competitors in diverse business areas. For this reason, it has had difficulty getting foundry orders from its competitors, who are worried about showing their designs to a formidable rival.
Apple usually gives foundry orders to TSMC. Apple’s orders account for about 50 percent of TSMC’s 5-nm production process. Qualcomm’s orders for 5G modem chips for Apple's iPhone account for another 30 percent. Due to the order overload at TSMC, some foundry orders are directed to Samsung Electronics.
However, Samsung Electronics makes a smaller investment in the foundry sector than TSMC and has a lower yield than TSMC. It needs to address these two problems to expand its presence in the foundry market.