10 years to invest $116 billion Samsung wants to grab chip supremacy

December 25 news, according tomedia reports, the tech giants are increasingly designing their own semiconductor chips to optimize AI function, improve server performance and extend battery life. Google owns the TPU, Apple owns the A13 bionic chip and Amazon owns the Graviton 2. However, the giants lack the technology to help produce new chips. To help them, Samsung Electronics plans to invest $116 billion over the next decade to expand its chip manufacturing business.

10 years to invest $116 billion Samsung wants to grab chip supremacy

Pictured: Samsung’s campus in Huahua, South Korea

Samsung is investing heavily in the next generation of semiconductor miniaturization technology, also known as UltraUv. It is the most expensive manufacturing upgrade Samsung has ever tried, and a risky attempt to stop itself from limiting itself to existing semiconductor manufacturing operations and to being a leader in the contract and logic chip industry, even though it is worth $250 billion.

“A new market is on the rise,” Nie Yong-sik, executive vice president of Samsung’s contract business, said at a recent forum in Seoul. Companies such as Amazon, Google and Alibaba, which have little experience in silicon design, are looking to use their own conceptual ideas to make chips to improve their service. I think this will be a major breakthrough for our non-storage chip business. “

In this growing field, Samsung is at a relative disadvantage. According to TrendForce, a market research firm, chip foundry businesses, such as those making chips for companies such as Google and Qualcomm, have always been dominated by TSMC, which has more than half of its market share, compared with just 18 per cent for Samsung.

TSMC also took over the contract business of Apple’s A-Series processor from Samsung, although Samsung was Apple’s original production partner. Samsung plans to spend more than $10 billion a year on equipment development over the next decade, but TSMC’s ambitions are even greater, with capital spending of about $14 billion this year and next.

“It’s not just a matter of will, chip making is like a synthetic art,” said CW Chung, head of pan-Asian science and technology at Nomura Financial Investments, as he assessed Samsung’s chances of success. This will be a difficult goal unless full support for the infrastructure is provided. “

To win over customers, Samsung executives are touring cities such as San Jose, Munich and Shanghai, holding foundry forums and negotiating deals.

“EUV devices are as complex as building spaceships, ” said Es Jung, president and general manager of Samsung’s foundry business, as he accompanied South Korean President Moon Jae-in and Lee in the opening of the $17 billion EUV plant earlier this year. “The plant is scheduled to start mass production in February 2020.

ASML Holding NV’s EUV machines are priced at $172 million, and Samsung is installing dozens of EUV machines in Huacheng in an effort to gain leadership in the technology. TSMC and Samsung are both expected to implement eUV’s 5nm production process in the new year, meaning they will become increasingly competitive in this growing market.

Once TSMC and Samsung accelerate and achieve economies of scale, upgrade times for the entire process cycle could be reduced by 20 per cent and contract production by 25 per cent, according to a Citigroup study.

Greg Roh, senior vice president of Hyundai Automotive Securities, said: “As we enter the 5G era, TSMC is extremely busy and orders for new products are pouring in. It’s also a great opportunity for Samsung to expand its market share by offering lower prices and shorter delivery schedules to meet customer needs. “

Samsung is working with key customers to design and manufacture custom chips, a job that has begun to boost its revenues, according to Samsung executives with direct knowledge of the matter. Silicon Valley and China’s push for custom processors is opening up new opportunities, as Samsung has already sying of, as evidenced by recent announcements that it will produce AI chips for Baidu early next year.

Samsung executives believe the company has a competitive advantage because of its extensive experience in making chips and devices. As a result, Samsung is able to anticipate and address engineering requirements faced by its customers. Another trump card, Samsung believes, is the ability to encapsulate memory and logic chips into a single module, improving power and space efficiency.

However, analysts warn that some companies are wary of direct competitors outsourcing production to the consumer electronics market, fearing that Samsung will learn and replicate its chip designs in its own products. “Ultimately, the success of Samsung’s logic chip business depends on its market positioning,” analysts said. On the contractside side, Samsung needs to dispel customers’ doubts and stop seeing them as potential competitors to the logic chip business. “

Samsung is in contact with its smartphone-making rival and has agreed to sell 5G Exynos chips to Vivo. At the same time, the company will use the same EUV process to manufacture Qualcomm’s 5G mobile chipset.

Samsung, on the other hand, is competing with contract customer Sony in the growing market for image sensors, releasing an unprecedented 108-megapixel smartphone camera this year. Anthea Lai, an analyst at Bloomberg think tank, said: “After the industry boom, I think Samsung’s CMOS image sensor business will continue to perform well. “

If Samsung can make technological progress, it should find that its diverse semiconductor offerings are not short of customers. While China is increasingly seeking technical support from domestic suppliers, the efficiency of EUV chips could be key to helping Samsung drum up business from China.

“The increased demand for in-house chips from major companies is good news for the growth of the wafer foundry industry,” said TrendForce analysts. “

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