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Foundry competition

Samsung, TSMC in heated race for industry’s smallest 3 nm process node

Intensifying rivalry between the two biggest foundry players comes as Intel vows to join the race

By Aug 04, 2021 (Gmt+09:00)

Competition is heating up among foundry players to stay ahead with technology advancement.
Competition is heating up among foundry players to stay ahead with technology advancement.

The world’s two largest foundry chipmakers, Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics Co., are in a heated race for the 3-nanometer process node, the industry’s narrowest circuitry.

While multiple news outlets from Taiwan reported on Wednesday that TSMC, the current industry leader, has begun installing a 3 nm chip fab at its plant in Tainan for mass production in 2022, Samsung is also said to be aiming for chip production using the same technology next year.

The competition is set to get fiercer as US tech giant Intel Corp. has thrown down the gauntlet to jump into the foundry business, a growing sector that manufactures cutting-edge chips for fabless firms, including chip designers.

According to Taiwan’s DigiTimes and other local media, TSMC on Aug. 2 began installing equipment for the leading-edge, next-generation 3 nm chip process node at its Fab 18 in Tainan for mass production of chips in the second half of next year.

With the technology, the company’s monthly wafer output is estimated at 3,000-5,000 units at the 3 nm facility, the reports said.

Fab 18 is currently responsible for producing chips on the company’s latest 5 nm process.

TSMC counts Apple Inc. and Advanced Micro Devices Inc. (AMD) among its major customers.

Chipmakers are competing to commercialize the 3 nm technology to manufacture chips with increased transistor density, faster data speed and reduced power consumption.

Currently, TSMC and Samsung are the only foundry players that can make chips using the 5 nm process node, the industry’s most advanced technology available for mass production.

If TSMC started installing 3 nm equipment as reported, the Taiwanese company will likely lead the industry in terms of technology advancement, analysts said.

TSMC is the world's top foundry player
TSMC is the world's top foundry player

SAMSUNG’S COUNTERATTACK

Samsung is striving to catch up with its bigger rival.

During its second-quarter earnings conference call last month, Samsung said it plans to start mass production of chips using its first-generation 3 nm process node next year.

The company also said it is on track to developing its second-generation 3 nm process node for mass production of chips in 2023.

TSMC and Samsung have been upping the ante to stay ahead by aggressively expanding facilities, particularly in the US.

The Taiwanese company last year disclosed plans for a $12 billion chip plant in Arizona, which is expected to come online in 2024.

In May of this year, Samsung announced a much-touted $17 billion investment plan to build a foundry factory in America.

TSMC is currently the biggest foundry player, controlling 55% of the global market, followed by Samsung with a 17% market share, according to market researcher TrendForce.

GROWING THREAT FROM INTEL

The rivalry between TSMC and Samsung comes as the US is trying to boost its domestic chip production to counter China’s rising influence.

As part of such efforts, Intel in March announced a $20 billion investment plan to build two new chip manufacturing factories and jump into the foundry business.

Intel is also jumping into the foundry business
Intel is also jumping into the foundry business

Analysts said Intel's foray into the foundry market with its state-of-the-art technology will particularly deal a blow to Samsung, which is struggling to narrow the gap with TSMC.

Intel Chief Executive Pat Gelsinger said last week it aims to become the world’s top foundry player by 2025 by investing heavily in that business. He said the company has already secured Qualcomm Inc. and other semiconductor companies as its clients.

RACE FOR 2-NANOMETER TECHNOLOGY

Gelsinger said the chips to be produced for Qualcomm in 2024 will use the 2 nm process node under its roadmap called Intel 20A, intensifying the competition for advanced chip manufacturing technology.

According to media reports, TSMC in July received government approval for its plan to build a 2 nm fab facility in Hsinchu's Baoshan township.

The greenlight cleared the way for TSMC to start construction of the facility in early 2022 and begin installing production equipment by 2023 for mass production in 2024, the reports said.

TSMC’s 2 nm process will be first applied to Apple’s new iPhone series of smartphones, they said.

Analysts said Samsung could lose its clients to its rivals unless it increases foundry investments.

Under its Vision 2030, Samsung plans to invest a total of 133 trillion won ($116 billion) to become the world’s top foundry player by then.

Samsung’s foundry operation chief said last week the company is targeting 20% annual sales growth for its foundry business this year.

Write to Shin-Young Park at nyusos@hankyung.com

In-Soo Nam edited this article.

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