Samsung Electronics is gearing up to regain ground in the foundry (semiconductor contract manufacturing) business. “We will focus on dramatically improving the yield of the 2-nanometer (nm) manufacturing process,” Samsung foundry division head Han Jin-man said on Dec. 9. “We aim to deliver a tangible turnaround next year.”
The 2nm process is critical for high-performance artificial intelligence (AI) chips, an area Samsung is competing fiercely with Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer.
Although Samsung has been at the forefront of developing advanced semiconductor processes, it has struggled with yields, or achieving a higher ratio of usable chips to total production. TSMC recently reached a 60% yield for its 2nm process and is expected to begin mass production early next year. Samsung aims to close this gap and reclaim market share by stabilizing yields for its 2nm process.
Han’s remarks come as TSMC prepares to deliver its first batch of 2nm products to Apple. He emphasized that “rapidly scaling up production for the 2nm process” is a top priority for the company. Currently, the most advanced technology is the 3nm process, and the 2nm is the next-generation foundry process. “We must admit that we are behind competitors, but we will overcome this challenge,” Han added.
Samsung’s hopes are pinned on its Gate-All-Around (GAA) technology, which improves power efficiency and performance by minimizing current leakage. In 2022, Samsung became the first chipmaker in the world to apply GAA to its 3nm process. TSMC is also expected to implement GAA in its 2nm process. “Although the 3nm process faced difficulties achieving high yields due to its technical complexity, Samsung gained a competitive advantage by adopting GAA ahead of competitors,” said an industry insider.
Han acknowledged these challenges, stating, “While we led the transition to GAA, commercialization remains a hurdle.” He also stressed the need to break the cycle of lagging behind competitors in subsequent generations of chipmaking.
Samsung’s share in the global contract chip manufacturing market dropped to 9.3% in the third quarter, falling below 10% for the first time. Analysts point to sluggish performance in the contract chip manufacturing and high-bandwidth memory (HBM) businesses for the company’s recent struggles, which have sparked speculation about a potential spinoff of the foundry division.
Samsung recently revamped its leadership to address these challenges, appointing technical experts to lead the foundry division. Han, who previously oversaw the DRAM, flash memory design, and SSD development teams, was named president. Nam Seok-woo, a process development specialist, was named Chief Technology Officer (CTO) of the foundry division.
Samsung’s efforts in the 2nm process are beginning to show results, with the company recently securing orders from major clients, including Japan’s AI semiconductor firm PFN. But catching up with TSMC remains a daunting task.
TSMC is expected to achieve over a 60% yield in trial production and enter mass production for 2nm chips ahead of Samsung. “If Samsung manages to attract just one of TSMC’s major customers, it could significantly shift the market dynamics,” said an industry insider.