This Year’s Foundry Market Expected to Reach 'All-Time High'... Will TSMC Extend Its Lead Over Samsung?

[Asia Economy Reporter Jeong Hyunjin] As the foundry (semiconductor contract manufacturing) market is expected to reach an all-time high this year, the aggressive investment moves of Taiwan's TSMC, the industry leader, are continuing, deepening the concerns of Samsung Electronics, the pursuer. Since TSMC decided to expand its investment scale this year beyond the original plan due to the surging semiconductor demand, Samsung Electronics' plan to narrow the gap based on its 'super-gap' technology may face setbacks.

According to market research firm TrendForce on the 16th, the foundry market revenue this year is expected to reach $94.6 billion (approximately 105.6682 trillion KRW), an 11% increase compared to the previous year. TrendForce explained that the demand for 5G, high-performance computers (HPC), and terminal devices surged sharply due to the impact of COVID-19.

This year, the market shares of TSMC and Samsung Electronics are projected to be 55% and 17%, respectively. While TSMC's share is expected to increase by 1 percentage point from 54% last year, Samsung Electronics is predicted to remain steady. In a rapidly expanding foundry market, the gap is not narrowing but rather widening. The market share of Taiwanese companies is estimated to grow from 63% last year to 65% this year, while Korean companies are expected to maintain 18%.

[Image source=Reuters Yonhap News]

[Image source=Yonhap News]

The core issue lies in the advanced process sector. Kim Ki-nam, Vice Chairman and Head of Samsung Electronics' Device Solutions (DS) Division, stated at last month's regular shareholders' meeting, "It is true that we lack market share, economies of scale, production capacity, and number of customers compared to leading companies, but our advanced process competitiveness is not inferior, and we will reduce the gap through efficient investment." Samsung Electronics is thus focusing on securing technological capabilities.

TSMC is rapidly advancing by increasing its investment scale this year. In its Q1 earnings announcement yesterday, TSMC revealed that it would raise its capital expenditure for this year from the initially planned $25-28 billion to $30 billion. While maintaining the existing plan to invest $100 billion over the next three years, it decided to bring forward some investments originally scheduled for next year or the year after to this year. Notably, 80% of this will be used for developing advanced processes at 3, 5, and 7 nm (nanometers, one-billionth of a meter), where it competes with Samsung Electronics. Although some expressed concerns about profitability decline due to increased investment, TSMC emphasized that it will pursue technological advancement to seize future opportunities.

From Samsung Electronics' perspective, eager to surpass TSMC in technological prowess, the urgency is inevitable. Therefore, Samsung Electronics' Q1 earnings conference scheduled for the 29th of this month is drawing attention. Interest centers on whether Samsung will disclose plans for investment in advanced processes and production facilities, including new and expanded semiconductor plants in Texas, Arizona, and New York in the U.S. Samsung began supplying first-generation 5 nm semiconductors from Q4 last year and plans to mass-produce second and third-generation 5 nm products simultaneously in the second half of this year. It also has set a goal to mass-produce 3 nm semiconductors in the second half of next year.

Meanwhile, the government announced that it will significantly increase the budget for automotive semiconductors next year in response to the global semiconductor hegemony competition. On the 16th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "We will identify items that can be commercialized in the short term and prioritize support through the materials, parts, and equipment (SoBuJang) project," adding, "We will also support new R&D budgets for power semiconductors to respond to the increased power consumption of future vehicles."

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