In the 3nm Competition, TSMC's '2nm' Gamble... Samsung's Calculations Grow More Complex

TSMC Begins Site Work for 2nm Factory... Related R&D Center to Debut Next Year
$35 Billion Investment in Advanced Technology Including 2nm This Year
TSMC Lagging in 3nm Mass Production, Aims to Compete with GAA 2nm
Samsung Chasing TSMC Faces Challenges in Technology Gap and Production Capacity Expansion

Source=Reuters Yonhap News

[Asia Economy Reporter Kim Pyeonghwa] The world's top two foundry market players, Taiwan's TSMC and Samsung Electronics, are shifting their competition stage from 3-nanometer (nm) to 2nm. As TSMC concretizes its work for the 2nm leading-edge process, Samsung Electronics, chasing TSMC, is under intense pressure. Ultimately, it is evaluated that widening the technology gap while increasing production capacity (capability) could be the solution for Samsung Electronics.

According to the semiconductor industry and foreign media on the 17th, TSMC has recently been specifying its 2nm process plans. Taiwan Central News Agency (CNA) reported on the 12th (local time) that TSMC will build a 2nm factory at the Baoshan Phase 2 site in the Hsinchu Science Park, Taiwan. It has received approval from the Hsinchu Science Park Administration and has started site work for the new factory. Previously, TSMC announced plans to introduce an advanced research and development (R&D) center near the 2nm factory site next year to develop 2nm process technology.

TSMC has announced large-scale investments for this purpose. According to semiconductor specialized media EE Times, at the 'TSMC Tech Symposium Japan 2022' held on the 2nd (local time) in Japan, TSMC stated that up to 80% of this year's capital expenditure would be spent on advanced process technologies, including the 2nm process. Given TSMC's forecasted capital expenditure of $40 billion to $44 billion this year, it could invest up to $35.2 billion.

The semiconductor industry sees TSMC's busy moves related to the 2nm process as driven by competition with Samsung Electronics. While TSMC is starting mass production of the 3nm process this month, Samsung Electronics had already begun initial mass production based on the 3nm process applying gate-all-around (GAA) technology?the world's first?in June, resulting in a loss of technological leadership. GAA is a next-generation technology that improves performance compared to the existing FinFET technology while reducing chip area and power consumption.

In this situation, TSMC exceptionally disclosed last month that the 3nm process yield exceeds 80%, seemingly conscious of Samsung Electronics' challenge to improve yield in the GAA 3nm process. On the 30th of last month (local time), Wei Zhejia, TSMC CEO, said at the TSMC Technology Forum held in Taiwan, "TSMC never makes my own products," and "TSMC's success is the customer's success, but competitors would never dare to say this." This was interpreted as an indirect jab at Samsung Electronics.

Samsung Electronics Suwon Campus / Source=Samsung Electronics

For Samsung Electronics, with the 3nm competition in full swing, TSMC's immediate push into the 2nm process could be a burden. While TSMC holds more than half of the foundry market share, it is a time when Samsung must explore various strategies to catch up, and the pace of leading-edge process competition is accelerating. Especially since TSMC will apply GAA technology starting from the 2nm process, it faces the task of increasing GAA maturity through earlier adoption. Samsung Electronics and TSMC both expect the 2nm mass production timing to be in 2025.

Samsung Electronics intends to secure a technological gap in the foundry competition with TSMC and devise strategies such as attracting TSMC's customers to its own customer base. Since increasing production capacity (capability) is essential to attract large customers, Samsung plans to focus on this as well.

Kyung Kye-hyun, President of Samsung Electronics' Device Solutions Division, said on the 7th at the Pyeongtaek campus in a meeting with reporters, "We are seeking ways to achieve not just the number one in total (foundry) sales but to be number one in substance," and "Foundry must cover the entire business from legacy to leading-edge, so we will enrich our portfolio."

According to market research firm TrendForce, the global foundry market share as of the first quarter of this year is ▲TSMC (53.6%) ▲Samsung Electronics (16.3%) ▲UMC (6.9%) ▲GlobalFoundries (5.9%).

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