TSMC Remains as Dominant Chipmaker Despite Samsung’s Push

Taiwan Semiconductor Manufacturing Co. (TSMC) maintains its dominant position in the contract chip manufacturing industry despite Samsung announcing ambition three years ago that it would be the world’s number one foundry. Samsung announced at the end of June that it would be the world’s first chipmaker to begin volume producing the 3nm chips. However, the South Korean company hasn’t announced any customers so far.

Samsung’s 3nm silicons are not initially produced at the company’s Pyeongtaek fab, where its newest equipment is being installed, but rather at its Hwaseong plants, where it develops manufacturing technology. This has caused speculation that initial 3nm production could be smaller in scale.

Chinese cryptocurrency miners are expected to be Samsung’s first clients for its 3nm semiconductors. However, due to volatility in cryptocurrency markets, it’s unclear how long term these miners will be.

Samsung’s foundry division has been having production issues since the start of 2021 when it was unable to increase output for its 5nm chips. This caused its biggest client, Qualcomm, to outsource more production to TSMC at the expense of Samsung.

Meanwhile, TSMC is expected to launch its 3nm chips by the end of this year.

TSMC has several advantages over Samsung, which makes it attractive to clients like Apple. As an example, TSMC is not a direct competitor of Apple as it is not in the smartphone market. It’s easier for clients such as Apple to trust TSMC with its proprietary chip designs. The Taiwanese chipmaker also has a unique lineup of off-the-shelf design data that complements a customer’s chip designs.

To try and catch up with TSMC, Samsung has recently moved several executives. Last month, it replaced around a dozen senior managers, including the head of the foundry manufacturing technology center.

The reshuffle points to Samsung looking for a revamp in its manufacturing technology, in addition to reorganizing its executives, which are currently largely comprised of those who have backgrounds in memory chips.

Competition between TSMC, Samsung, and Intel in the foundry market is expected to remain fierce going forward. Especially since overall consumer electronics demand is now trending downward due to global inflation worries.

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