A Money Game among Top Foundry Players
Samsung Electronics and Intel are making large-scale investments in the foundry sector in a bid to challenge the dominance of TSMC.
Samsung Electronics is close to finalizing the site selection for its new US$17 billion foundry in the United States. The investment plan was officially unveiled in May. The investment is aimed at establishing a second foundry following the existing plant in Austin, Texas.
Samsung Electronics is negotiating with five city governments in three states: Austin and Taylor in Texas, Goodyear and Queen Creek in Arizona, and Western New York Science and Technology Advanced Manufacturing Park (WNY STAMP). Samsung’s decision appears to be imminent.
Taylor City and Williamson County held a joint meeting on Sept. 8 (local time) and unanimously approved a resolution to refund 90 percent of the property tax to be paid by Samsung Electronics in the first 10 years and return 85 percent of the tax in the next 10 years.
Intel is also planning to invest massively after announcing its re-entry into the foundry market in March. Intel CEO Pat Gelsinger announced in a keynote speech at the International Auto Show (IAA) in Munich, Germany on Sept. 8 (local time) that Intel will invest US$95 billion in building two chip-making facilities in Europe.
In March, Intel announced its re-entry into the foundry business, laying out a plan to build two semiconductor plants in Arizona and expand existing factories in New Mexico. Since then, the U.S. chipmaker has announced massive investment plans. In July, a media outlet reported that Intel was considering acquiring GlobalFoundries, the fourth-largest foundry company in the world, by investing US$30 billion.
TSMC, the undisputed No. 1 player in the foundry market, is also responding to competitors' investment plans. In April, the Taiwanese chipmaker announced a plan to build six sub-5-nm semiconductor fabs, including a US$12 billion foundry plant in Arizona, by investing US$100 billion over the next three years.
TSMC is also considering building six 7-nano factories in Kaohsiung, southern Taiwan, and will invest 20 billion yen in Japan to build a semiconductor packaging R&D center.
Other key players in the foundry sector are also actively investing. The world third-largest foundry company, UMC of Taiwan, is investing US$3.6 billion (about 4.2 trillion won) to expand its foundry plant in southern Taiwan.
GlobalFoundries, the fourth-largest company announced in June that it would build a new semiconductor plant in Singapore by investing US$4 billion.
China's SMIC, which is ranked fifth, will invest US$8.87 billion to build a new factory in the Shanghai Free Trade Zone. The company plans to churn out over-28-nm products at facilities that can process 100,000 12-inch wafers every month. As SMIC announced the plan, industry insiders expects TSMC to compete with it in China as it will expand a 28-nm chip production line at its plant in Nanjing, China.
The massive investment plans of these top players raise the possibility of market reorganization in the future.
Currently, TSMC enjoys dominance in the foundry market. It accounted for an overwhelming share of 52.9 percent in the second quarter of 2021, followed by Samsung Electronics with 17.3 percent, UMC with 7.1 percent, Global Foundries with 5.5 percent, and SMIC with 4.7 percent, according to market research firm TrendForce.
The combined sales of the world's top 10 foundry companies in the second quarter of 2021 amounted to US$24,407 million (about 28.25 trillion won), up 6.2 percent from the previous quarter's US$22,971 million, TrendForce added. The foundry industry enjoyed steep growth.
"The current investments will pay off several years later,” an industry official said. “This means no significant change will take place in the market structure in the near future. But as foundry investment competition is shaping into a money game, economies of scale may be a factor that cannot be disregarded down the road.”