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Foundry competition

Samsung to ramp up EUV scanners to take on foundry leader TSMC

By Mar 15, 2021 (Gmt+09:00)

Samsung Electronics Vice Chairman Jay Y. Lee visits ASML's headquarters in October 2020.
Samsung Electronics Vice Chairman Jay Y. Lee visits ASML's headquarters in October 2020.

In the semiconductor industry, having cutting-edge equipment to produce advanced chips is crucial to chipmakers' survival, particularly foundries that make products for others, such as fabless firms and chip designers.

One such device is an extreme ultraviolet (EUV) scanner that uses lithography technology to draw elaborate and detailed patterns on semiconductor wafers.

Unlike conventional machines, EUV scanners can simplify the chip fabricating process by reducing the number of photolithography processes required to create finer circuits, prompting major chipmakers to compete for the equipment.

Samsung Electronics Co., the world’s top memory chipmaker, is no exception as the tech giant aims to enhance its presence in the global foundry market, currently led by Taiwan Semiconductor Manufacturing Co. (TSMC).

The problem is that the Netherlands-based ASML Holding N.V. is the world’s only maker of EUV lithography machines and it can produce only about 40 units a year.

“EUV equipment is costly and limited in supply. But without it,  you can’t lead the market,” said Lee Jong-ho, an electrical and computer engineering professor at Seoul National University.

“The Samsung chief’s visit to ASML last year shows how important it is to procure the machines.”

SAMSUNG TO CLOSE IN ON TSMC

Embarking on his first overseas business trip in five months, in October 2020 Samsung’s de-facto leader and Vice Chairman Jay Y. Lee flew to the ASML headquarters to discuss stable procurement of the EUV machines, which cost over 200 billion won ($177 million) a unit.

According to industry officials, Samsung currently has 25 EUV scanners, about half the quantity owned by its bigger rival TSMC.

Samsung to ramp up EUV scanners to take on foundry leader TSMC

Seeking a bigger slice of the foundry market, the South Korean chipmaker is known to have placed orders for about 20 scanners during Lee’s visit to ASML last year.

ASML has increased the production of EUV scanners and produced 75 machines since 2018 when demand from clients for 5-nanometer process chipsets was increasing. TSMC is said to have bought some 60% of the machines produced.

For 3-nanometer and finer process nodes, Samsung plans to adopt its own skill, known as gates all around (GAA) technology, as demand for advanced chips is growing with the take-off of artificial intelligence, 5G and autonomous driving.

COMPETITIVE INVESTMENT

According to market tracker TrendForce, Samsung is the world’s second-largest foundry player with an estimated market share of 18% in the first quarter of this year. That’s well below TSMC’s estimated 56%.

Under Samsung’s Vision 2030 announced in April 2019, the company plans to invest a total of 133 trillion won to become the world’s top foundry player by then. The company is known to be spending 10 trillion won a year to develop chip foundry technology and purchase the necessary equipment to close in on bigger rival TSMC.

However, the Taiwanese company is spending about three times more than Samsung on its foundry business to maintain its leadership.

Officials said TSMC plans to make a record annual investment of $28 billion to build 3-nanometer production lines in Taiwan this year.

UPHILL BATTLE IN AP CHIPS, IMAGE SENSORS

Samsung and other Korean chipmakers also face growing challenges from their global peers in the chip design business.

Samsung’s LSI business, which makes communication chips and image sensors, has ranked third or fourth in the global smartphone application processor (AP) market, as the company has about 30% fewer chip designers than its bigger rivals.

Samsung to ramp up EUV scanners to take on foundry leader TSMC
Qualcomm Technologies Inc. and Taiwan’s MediaTek Inc. are leading the high-end and low-end AP markets with about a 60% market share in each, respectively.

In the image sensor market, Samsung faces an uphill battle with industry leader Sony Corp.

According to market tracker TSR, Samsung’s image sensor market share stood at 19.8% in 2020, compared with Sony’s 45.1%.

“More Korean chipmakers need to be included in the global foundry ecosystem if Korea wants to stay in the arena. The government should do its role to make it happen,” said Kyung Chong-min, an electrical engineering professor at KAIST, Korea’s national research university.

Write to Jeong-Soo Hwang and Su-Bin Lee at hjs@hankyung.com

In-Soo Nam edited this article.

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