Semiconductor Big 2, Foundry Drive

Samsung Electronics, Industry's First Mass Production Based on 5nm Process
SK Hynix, Subsidiary Factory to Relocate to China in First Half of Year

Samsung Electronics Hwaseong Campus EUV (Extreme Ultraviolet) Dedicated Line V1.

[Asia Economy Reporter Dongwoo Lee] Samsung Electronics and SK Hynix are actively strengthening their semiconductor foundry (contract manufacturing) businesses. Samsung Electronics has begun a full-scale competition in ultra-fine process technology with Taiwan's TSMC for the global leading position, while SK Hynix plans to secure new growth engines centered on Chinese semiconductor design (fabless) customers.

According to industry sources on the 18th, Samsung Electronics will start mass production of Qualcomm's 5G modem chip 'Snapdragon X60' based on the industry's first 5nm (nanometer, one billionth of a meter) process in the first quarter of this year. Production will be handled at the extreme ultraviolet (EUV) dedicated 'V1 line' factory located in Hwaseong, Gyeonggi Province.

Samsung Electronics is focusing on ultra-fine processes below 7nm for high-value-added products such as high-performance microprocessors and mobile application processors (APs). This is interpreted as a strategic move to divide the global foundry market with TSMC in the future.

Looking at Samsung Electronics' foundry fine process roadmap, mass production of 7nm started in April last year, and product design for 5nm was completed in the second half of the same year. The company plans to start 5nm mass production in the first half of this year and complete the development of the 4nm process in the second half. Samsung plans to produce 3nm chips between 2022 and 2023, which coincides with TSMC's target timeline for 3nm production.

As of last year, TSMC's global foundry market share was 52.7%, while Samsung Electronics held 17.8%. The industry estimates that the foundry business accounted for 5.95% of Samsung Electronics' total sales as of the third quarter of last year. Samsung Electronics plans to invest 133 trillion won in research and development (R&D) and production facilities by 2030 to increase the share of system semiconductors to over 10% of total sales, positioning system semiconductors as a future growth engine.

SK Hynix System IC M8 factory located in Cheongju-si, Chungbuk.

SK Hynix plans to complete the relocation of its 100% subsidiary SK Hynix System IC's M8 foundry plant in Cheongju to the Wuxi plant in the first half of this year and start production from the second half. SK Hynix System IC established a joint venture in 2017 with 'Wuxi Industrial Group,' an investment company of the Wuxi city government in China. While keeping R&D functions in Korea, the company plans to promote a system semiconductor business focused on high value-added and high technology mainly in China.

SK Hynix is also known to have recently participated in the acquisition of the foundry business unit of MagnaChip Semiconductor, a domestic non-memory semiconductor company. The deal size is 400 billion won, with SK Hynix acting as a subordinated investor alongside a domestic private equity fund (PEF).

The reason SK Hynix is strengthening its foundry business is to break away from its business structure concentrated on memory. SK Hynix recorded sales of 20.2926 trillion won in DRAM last year, accounting for 75.0% of total sales. In contrast, the sales proportion of foundry and image sensors is about 5.5%.

SK Hynix plans to increase the share of foundry sales by securing customers among about 1,000 fabless companies in China through the Wuxi plant in the second half of the year. Based on this, the company intends to establish specific foundry investment plans in the future. Additionally, SK Hynix will invest 120 trillion won by 2028 to develop a semiconductor cluster in Yongin City.

This content was produced with the assistance of AI translation services.