Samsung Electronics on Alert
Nvidia CEO Jensen Huang drew sharp attention from global foundry companies by suggesting that his company may partner with Intel to build its next-generation chips. The global No. 1 player in graphic processing units (GPUs) currently outsources the bulk of chip manufacturing to Samsung Electronics and TSMC.
Huang met with U.S. reporters on March 23 (local time). When asked about Intel’s Foundry Services, he said, “They’re interested in us using their foundries, and we’re very interested in exploring it.”
Intel CEO Pat Gelsinger also expressed his interest in building Nvidia’s next-generation chips. Intel is “thrilled for their interest in using our foundry capabilities,” Gelsinger told Reuters following a United States Senate hearing.
Huang’s remarks can be a simple, basic response from the CEO of a fabless company who wants to gain the upper hand in negotiations with a foundry firm. However, his remarks need to be seen in the context of the current U.S. Biden administration seeking to create a fabless-foundry ecosystem centered on the United States.
Intel is asserting that the United States should take back the semiconductor production hegemony lost to Asia with the support of the U.S. government. Intel CEO Pat Gelsinger told in an interview with CNBC that the United States currently produces 12 percent of the world’s semiconductors, with half of them made by Intel. Noting that the U.S. may become permanently dependent on geopolitically unstable Asia and other countries for semiconductors, he stressed that it must take quick action now.
Accordingly, a sense of crisis is emerging in the foundry industry. In particular, Samsung Electronics is on alert as it may have to face another strong competitor while staging an uphill battle against TSMC, the industry's top player with more than 50 percent of the foundry market.
Of course, it is not easy for Intel to catch up with Samsung Electronics at one fell swoop. Technically, only TSMC and Samsung Electronics are capable of producing sub-5 nanometer chips at the moment. These two foundry heavyweights also announced plans to introduce 3-nm processes in 2022. Intel announced that it will introduce a 2-nm process in 2024 and a 1.8-nm process in 2025, but it remains to be seen whether the U.S. company will succeed in actual volume production of semiconductors.
However, it should be reminded that Intel is a U.S. company, and it can grow in size through mergers and acquisitions (M&As) with the support of the U.S. government.