TSMC Sets New Sales Record for 4 Consecutive Quarters... Samsung Electronics, the Breathless Challenger

TSMC Sets New Quarterly Sales Record for 4 Consecutive Quarters Amid Foundry Supply Shortage
Peak Season for Mobile and Computer Semiconductors
Samsung Semiconductor Achieves Surprise 2Q Results
Sales Lead but Operating Margin Lags
Foundry Growth Requires Large-Scale Investment and M&A

[Asia Economy Reporters Su-yeon Woo and Hyun-jin Jeong] Taiwanese foundry company TSMC has extended its record-breaking highest sales for four consecutive quarters, widening the sales gap with Samsung Electronics in the foundry market. Although Samsung Electronics also achieved a surprise performance in the second quarter thanks to the memory semiconductor boom, experts point out that meaningful growth in the system semiconductor sector, including foundry, must be supported for a significant leap forward.

As TSMC solidifies its position as the top player by announcing large-scale investment plans and conducting 3nm process production tests with Apple and Intel, Samsung Electronics urgently needs to present investment strategies such as foundry expansion focused on advanced processes and mergers and acquisitions (M&A).

◆ TSMC, Four Consecutive Quarters of Record-Breaking Sales= According to industry sources on the 12th, TSMC recorded its highest-ever quarterly sales of 372.146 billion New Taiwan dollars (approximately 15.23 trillion KRW) in the second quarter of this year, a 19.7% increase compared to the same period last year. In particular, in June alone, the last month of the quarter, it set a record monthly sales of 148.471 billion New Taiwan dollars (approximately 6.07 trillion KRW), showing strong momentum. This was due to the continued shortage of foundry supply and the peak season for mobile chips supplied to Apple and computer processors.

With this, TSMC has set new sales records for four consecutive quarters. It succeeded in achieving quarterly sales exceeding 15 trillion KRW from the foundry business alone. As of the first quarter, its operating profit margin (41.5%) exceeded 40%. Due to the global semiconductor supply shortage making foundry price increases inevitable, TSMC’s quarterly sales have already surpassed the levels seen during the supercycle (long-term boom) from late 2016 to 2018.

◆ Samsung Semiconductor Holds Its Ground but Faces Clear Limits= Samsung Electronics also achieved a surprise performance led by its semiconductor division in the second quarter of this year. Semiconductor sales are estimated to be between 21 trillion and 23 trillion KRW, with memory division sales alone reaching 17 trillion to 18 trillion KRW. However, the system semiconductor sector, including foundry, remained around 5 trillion KRW.

When comparing absolute sales figures, Samsung Electronics leads TSMC, but in terms of profitability indicated by operating profit margin and foundry market share, Samsung is lagging behind. As of the first quarter, TSMC’s operating profit margin was 41.5%, while Samsung Semiconductor’s was 17.7%, and TSMC held 55% market share compared to Samsung’s 17%. There are forecasts that the market share gap may widen in the second quarter due to TSMC’s rapid sales growth.

Although Samsung Electronics achieved an earnings surprise thanks to the semiconductor division’s strong performance in the second quarter, the stock price has not supported this, which is explained by these factors. Industry experts agree that for Samsung, which is solidifying its leadership in memory semiconductors, meaningful performance growth requires expansion in the foundry sector.

Samsung Electronics’ overall sales have remained at around 200 trillion KRW for eight years since 2012. To break through the 200 trillion KRW barrier, the semiconductor division must drive performance growth, and among them, the foundry sector, which still has room for profitability and market share expansion, is expected to play a leading role. For this, large-scale foundry investments or market-shaking mergers and acquisitions (M&A) are urgently needed, but Samsung has yet to make a decisive move. Concerns about missed opportunities due to lack of ownership are being raised.

Seung-woo Lee, a researcher at Eugene Investment & Securities, said, "The recent semiconductor supercycle is strictly speaking a ‘foundry supercycle,’ and including memory is debatable," adding, "Samsung Electronics needs to show possibilities for growth and change through considerations such as M&A or business organization restructuring to increase corporate value."

◆ Samsung vs. TSMC, The 3nm Foundry Competition ‘Real Showdown’= The future leadership battle in the global foundry market is expected to be decided in advanced processes below 3nm. Samsung Electronics and TSMC are the only two companies worldwide capable of producing foundry products at 5nm or below. Both companies are accelerating technology acquisition aiming for mass production of 3nm products next year, and attention is focused on who will succeed in mass production first.

Earlier this month, Nikkei Asia reported citing multiple sources that TSMC has started 3nm product testing with Apple and Intel and will begin mass production in the second half of next year. Since TSMC has started 3nm semiconductor sample testing with major clients first, the industry views TSMC as being one step ahead.

In response, Samsung Electronics is counterattacking with 3nm process technology based on the ‘Gate-All-Around (GAA)’ structure. Introducing the GAA process improves power efficiency compared to existing processes and allows more precise control of current flow. Last month, U.S. semiconductor design automation company Synopsys announced that it had succeeded in the ‘tape-out’ of Samsung Electronics’ GAA-based 3nm process. Tape-out is the stage where the process development is completed and the design is handed over to the manufacturer, after which verification and trial production follow.

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