Nano Competition
Samsung Electronics recently succeeded in developing a 14-nanometer FinFET process technology to attract Apple and Qualcomm, major customers of TSMC, as its customers. Under the circumstances, the competition between Samsung Electronics and TSMC is likely to be heating up over time with each of them having declared it would be the first company to adopt 10-nano technology.
TSMC, in response, announced this month that it would invest approximately 500 billion TWD (US$15.9 billion) to expand its facilities in Taichung City and start building three new plants in May to manufacture products adopting 10-nanometer process technology in 2017 and 8-nanometer technology in 2018. Including R&D expenses, the total investment reaches 700 billion TWD (US$22.3 billion), the largest investment ever since its inception.
TSMC, which is currently taking up 50 percent of the global foundry market, recorded 26.7 trillion won (US$24.3 billion) in sales last year. The amount is about 10 times that of the foundry division of Samsung Electronics. Still, TSMC is regarding Samsung Electronics as a threatening competitor, because of its advanced micro-fabrication process technology in the memory segment. Samsung Electronics, in addition, has formed an alliance against TSMC by providing a 14-nanometer FinFET technology license for Global Foundries, the second-largest foundry company in the world. Even AMD and Nvidia are planning to entrust the alliance with chip production, with the 16-nanometer FinFET process TSMC has concentrated upon bearing no fruit.
TSMC’s sense of crisis was further fueled when Samsung Electronics unveiled its next-generation 10-nanometer technology at this year’s International Solid-state Circuits Conference (ISSCC) on Feb. 23. Semiconductor processes take a couple of years from development to mass production in most cases. An industry source mentioned that Samsung Electronics is going to reduce the process to 7 nm in the near future.
Samsung Electronics was a late starter in the foundry industry. However, it is looking to increase its market share by taking the lead in microfabrication. It has room for large-scale investment as well, with its cashable assets amounting to US$60 billion, nearly six times that of TSMC. In this context, Samsung Electronics held an investor forum in New York in November last year and suggested the concept of a total foundry solution as one of its three long-term business strategies.