Two Companies Could Cooperate in System Semiconductors
Samsung Electronics vice chairman Lee Jae-yong met with Intel CEO Pat Gelsinger on May 30 to discuss ways to cooperate in the semiconductor sector. The two met at Samsung Seocho Building in Seoul and discussed over dinner such issues as strengthening the global semiconductor supply chain, production diversification and technological cooperation in the next-generation memory semiconductor, foundry and fabless sectors. The Intel CEO visited Korea after attending the Davos Forum in Switzerland.
The meeting between the heads of Samsung and Intel took place 10 days after U.S. President Joe Biden visited Samsung Electronics’ Pyeongtaek semiconductor plant with Korean President Yoon Suk-yeol on May 20 to strengthen the economic and technological alliance between Korea and the United States.
Samsung Electronics and Intel are long-time competitors and, at the same time, partners in the semiconductor industry. Samsung produced Intel’s CPUs and formed a consortium with Intel in 2019 to share technology and platforms for CXL-based memory semiconductors.
The two companies compete neck and neck in the system semiconductor and foundry fields. As for system semiconductors, Intel has overwhelming technological power compared to Samsung, but Samsung is closely trailing Intel with rapid growth in the image sensor and mobile SoC sectors. In the foundry business, Taiwan's TSMC is the global No. 1 player and Samsung ranks second, but Intel is threatening Samsung by declaring its re-entry into the foundry industry last year. For this reason, analysts say that Samsung is unlikely to cooperate with Intel in the foundry and system semiconductor sectors.
Intel announced that it would re-enter the foundry business last year and announced a plan to build new production lines worth US$80 billion in Arizona and Ohio in line with the Biden administration’s policy focusing on forming a semiconductor supply network in the United States. It announced a plan to catch up with TSMC and Samsung by mass-producing products via a 1.8-nm process beginning from 2025.
However, the global foundry market is saturated due to supply and demand imbalances. TSMC and Samsung have overwhelming technological superiority in the foundry industry. They aim to start mass production of 3-nm products in the first half of this year. Intel is already collaborating with TSMC, but giving all of its foundry orders to TSMC is too risky.
On top of that, Intel has lost Apple, a major customer. Apple started to use its own CPUs for its Mac computers. On the other hand, Samsung is a strong player in the laptop and PC markets and the mobile sector. This means that Intel and Samsung could usher in a new PC era through foundry cooperation. A win-win relationship can be created through mutual cooperation not only in semiconductors but in set products.
The meeting between Lee and Gelsinger will be an opportunity to open the door to strengthening technological cooperation between Korea and the United States at the private level. Korea and the United States can promote cooperation not only in the memory semiconductor industry led by Samsung and other Korean chipmakers but in the system semiconductor sector, where they are relatively weak.