NVIDIA Followed by Apple Expectations... Samsung Electronics Foundry Business Rapid Growth

[Asia Economy Reporter Changhwan Lee] Analysis continues that Samsung Electronics' foundry (semiconductor contract manufacturing) business is rapidly growing due to new customer acquisition and large-scale orders.

According to industry sources on the 13th, the estimated revenue of Samsung Electronics' foundry business this year is around 14 to 15 trillion won. This is a figure that has surged more than 30% from about 11 trillion won last year. This is because Samsung Electronics received large-scale orders this year from major clients such as IBM, Nvidia, and Qualcomm.

IBM announced on the 17th of last month the release of the next-generation server CPU 'POWER 10' and stated that it will be produced using Samsung Electronics' state-of-the-art extreme ultraviolet (EUV)-based 7-nanometer process.

POWER 10 is a product applying IBM's design technology and Samsung Electronics' EUV-based 7-nanometer process, with performance up to three times higher at the same power compared to the existing POWER 9. IBM plans to launch servers equipped with the POWER 10 CPU in the second half of 2021.

American graphics card company Nvidia also decided to outsource the production of its next-generation graphics processing unit (GPU) to Samsung Electronics. Nvidia announced earlier this month the release of the next-generation GPU 'GeForce RTX 30' series and stated that the new products will be produced through Samsung Electronics' 8-nanometer foundry.

Until now, Nvidia has produced semiconductors using Taiwan's TSMC process, but the latest GPU introduced this time will utilize Samsung Electronics' 8-nanometer process.

Samsung Electronics is also known to have recently secured production orders for Qualcomm's 5G mobile communication application processor (AP) Snapdragon 4 series in the United States. The 4 series is a mid-to-low-end 5G chip purchased by Xiaomi, Oppo, Motorola, and others, expected to be commercialized in the first quarter of next year.

As large-scale orders continue in the foundry sector like this, analysis shows that Samsung Electronics' foundry division's revenue is rapidly growing. The industry expects that next year's revenue of the foundry division could increase by more than 50% compared to this year, reaching the low 20 trillion won range.

It is also positive that the outlook for additional orders is bright due to the recent shortage of production capacity at foundry competitor TSMC. TSMC has been continuously receiving orders from mega clients such as Apple and Intel, but it is reported that the current factory scale cannot handle their order volumes. Accordingly, the shortfall in volume is expected to be taken by Samsung Electronics, the second-largest foundry company.

Do Hyunwoo, a researcher at NH Investment & Securities, said, "Despite TSMC increasing its investment (Capex) to 16 to 17 billion dollars this year, it is still unable to meet the overflowing demand," adding, "If Intel entrusts part of the production of its 7-nanometer processors to TSMC in 2021, this situation will worsen, and Samsung Electronics' foundry will secure most of the volumes that TSMC cannot handle."

Researcher Do stated, "Since Samsung Electronics' foundry has secured most of Nvidia's latest graphics card RTX 30 series GPUs, as well as IBM server processors and some Qualcomm 5G modem chips and AP models, it is possible for Samsung Electronics' foundry revenue to grow by more than 50% next year."

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