Samsung Elec starts 3-nanometre chip production to lure new foundry customers

Samsung Electronics Co Ltd said Thursday it has begun mass production of chips with its advanced 3nm technology, the first globally to do so, as it seeks new customers to catch its much larger contract chip rival TSMC.

Compared with traditional 5nm chips, the newly developed 3nm process can reduce power consumption by up to 45%, improve performance by 23%, and reduce space by 16%, Samsung said in a statement.

The South Korean company did not mention customers due to its latest foundry technology, which provides custom-made chips such as mobile processors and high-performance computing chips, and analysts said Samsung itself and Chinese companies are expected to be among the first customers.

Taiwan Semiconductor Manufacturing Co (TSMC) is the world’s most advanced foundry chip maker and controls about 54% of the global contract chip production market, which is used by companies like Apple and Qualcomm that do not have their own semiconductor facilities.
Samsung, which is by far the second with a market share of 16.3%, announced a 171 trillion won ($132 billion) investment plan last year to overtake TSMC as the world’s largest logic chip maker by 2030.

“We will continue to actively innovate in developing competitive technology,” said Seung Choi, President of Samsung’s Plumbing Business.
Samsung co-CEO Kyung Kye-hyun said earlier this year that its foundry business will be looking for new customers in China, where it expects high growth in the market, as companies from automakers to electrical appliance manufacturers scramble to secure capacity to address shortages. Universal Continuous in chips.

While Samsung is the first to produce 3-nm chips, TSMC plans to produce 2-nm chips in 2025.

Analysts said Samsung is the market leader in memory chips, but TSMC is leading its spending on more diversified plumbing, making competition tough.

“Changing memory is different, there is a lot of variety,” said Kim Yang Jae, an analyst at Daol Investment & Securities.

“There are only two types of memory chips – DRAM and NAND Flash. You can focus on one thing, raise efficiency and make a lot of it, but you can’t do that with thousands of non-memory chips.”

Samsung’s compound annual growth rate (CAGR) for capital spending between 2017 and 2023, which measures how quickly the company can increase its investment, is estimated at 7.9%, versus TSMC’s estimated 30.4%, according to Mirae Asset Securities.

Analysts said Samsung’s efforts to compete with the industry leader have also been hampered by lower-than-expected returns from older chips over the past year or so. The company said in March that its operations had shown gradual improvement.

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