Samsung Electronics Co.’s semiconductor manufacturing division has won Qualcomm’s latest contract to use its state-of-the-art chip manufacturing technology to produce Qualcomm’s 5G chips, according to two people familiar with the matter, according to two people familiar with the matter, according to two people familiar with the matter, which will boost Samsung’s fight for market share with TSMC.
Samsung will make some qualcomm x60 modem chips that will connect devices such as smartphones to 5G wireless data networks. People familiar with the matter said the X60 would be made using Samsung’s 5nm process, making the chip smaller and more energy-efficient than previous generations. In addition, TSMC is expected to manufacture 5nm modems for Qualcomm.
Samsung and Qualcomm declined to comment, and TSMC did not immediately respond to a request for comment.
Samsung, best known to consumers, is the world’s second-largest chipmaker through its contract ingress division, owns many handset parts and makes chips for outside customers such as IBM and Nvidia.
But historically, most of Samsung’s semiconductor revenue has come from memory chips, and the price of memory chips may fluctuate as supply and demand fluctuate. To reduce its reliance on the volatile market, Samsung announced plans last year to invest $116 billion in non-memory chips by 2030.
The deal with Qualcomm shows that Samsung has made progress in winning customers for this effort. Even if Samsung wins only part of the order, Qualcomm is the most important customer of Samsung’s 5nm manufacturing process. Samsung plans to step up development of the technology this year in an attempt to wrest more market share from TSMC, which will begin mass production of 5nm chips this year.
Winning the Qualcomm contract could boost Samsung’s contractbusiness business, because as many mobile devices switch to 5G, x60 modems could be used on those devices. Samsung’s market share was 17.8 per cent in the fourth quarter of 2019, compared with 52.7 per cent for TSMC, according to TrendForce, a market research firm.
Qualcomm said in a separate statement Tuesday that it will begin sending x60 chip samples to customers in the first quarter of this year. But Qualcomm has not said who will produce the chips, and it is unclear whether the first chips will be produced by Samsung or TSMC.
TSMC has won customers such as Apple by increasing chip production more quickly using its previous 7nm manufacturing process. Last month, TSMC executives said they expected to start ramping up production of 5nm chips in the first half of the year, which is expected to account for 10 per cent of the company’s 2020 revenue.
Asked on an investor conference call in January how Samsung would compete with TSMC, Shawn Han, Samsung’s senior vice president of wafers, said the company plans to expand 5nm chip production this year through “diversified customer applications.”
Qualcomm designs its own chips, but works with outside companies to make them. The company used to produce chips through Samsung, TSMC and SMIC, depending on which fab’s technology and pricing could meet its product needs.