Samsung Electronics’ Burden Mounting

Memory chip plant of Samsung Electronics in China

U.S. President Joe Biden had a video conference with the CEOs of 19 semiconductor companies on April 12. Two days later, TSMC, the largest foundry in the world, announced that it would sever its business relationship with Chinese client Phytium. Samsung Electronics’ burden is mounting with TSMC as well as Intel working more closely than before with the administration.

Phytium is a CPU design company without its own manufacturing facilities. It is one of the seven Chinese institutions and enterprises on the blacklist of the United States Department of Commerce, which remarked on April 8 that Chinese supercomputers were used for anti-U.S. military activities. CPUs developed by Phytium have been supplied for use in supercomputers run by military-related institutions in China.

TSMC is speeding up its investment in the United States at the same time. The Taiwanese company is planning to build two plants in Arizona by investing US$12 billion and interviews are underway for 1,000 employees to be sent there. Some news outlets even reported that the figures might be six and US$36 billion although TSMC has made no official comments about the prediction.

The Taiwanese company posted a record performance in the first quarter of this year. Specifically, its Q1 sales are approximately 14.2 trillion won, up 16.7 percent from a year ago. Its Q1 operating profit is estimated at 36.6 percent of the sales. According to industry sources, this is because U.S. clients, including Apple, Nvidia, AMD and Qualcomm, increased their orders in that period. The U.S. companies account for 60 percent of TSMC's client base.

“Most TSMC clients are in the United States and the company has no manufacturing facilities in China,” one of them mentioned, adding, “In contrast, Samsung Electronics and SK Hynix have large memory chip plants in China and this is why they are hesitating to side with the United States unlike TSMC.”

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