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Samsung Elec begins manufacturing 3-nanometer chips to entice new foundry clients

Image: Reuters Berita 24 English -  As it looks for new customers to overtake much larger rival TSMC in contract chip production, Samsung El...

Image: Reuters

Berita 24 English -  As it looks for new customers to overtake much larger rival TSMC in contract chip production, Samsung Electronics Co. Ltd. announced on Thursday that it has started mass producing chips with cutting-edge 3-nanometer technology.

First-generation 3-nanometer chips, which have just been developed, can boost performance by 23%, consume up to 45% less power, and take up 16% less space than standard 5-nanometer circuits, according to a statement from Samsung.

Analysts predict that Samsung itself and Chinese businesses will be among the first customers for the South Korean company's newest foundry technology, which offers made-to-order devices including mobile CPUs and high-performance computing chips.

The most technologically advanced foundry chip manufacturer in the world, Taiwan Semiconductor Manufacturing Co. (TSMC), holds approximately 54% of the global market share for chip contract manufacturing, which is used by companies like Apple and Qualcomm that don't have their own semiconductor manufacturing facilities.

According to data provider TrendForce, Samsung is a distant second with a 16.3% market share. Last year, Samsung proposed a 171 trillion won ($132 billion) investment plan to replace TSMC as the leading logic chipmaker by 2030.

Siyoung Choi, Head of Foundry Business at Samsung, declared, "We will continue actively innovating in competitive technology development."

In an earlier statement, Samsung Co-CEO Kyung Kye-hyun stated that the company's foundry business would seek out new customers in China, where it anticipates strong market growth, as businesses ranging from automakers to producers of consumer electronics scramble to secure capacity to address the ongoing global chip shortages.

While TSMC plans to begin mass 2-nanometer production in 2025, Samsung will be the first to commercialise 3-nanometer chips.

Although it dominates the memory chip market, TSMC has outspent Samsung in the more diverse foundry market, making it tough for Samsung to compete, according to analysts.

An analyst at Daol Investment & Securities named Kim Yang-jae said, "Non-memory is different; there is too much diversity."

"Memory chips come in just two varieties: DRAM and NAND Flash. With one single non-memory chip, you can increase productivity, produce a lot of it, but not with a thousand distinct non-memory chips."

According to Mirae Asset Securities, Samsung's capital spending between 2017 and 2023 is expected to expand at a compound annual growth rate (CAGR) of 7.9 percent, compared to TSMC's projected CAGR of 30.4 percent.

Less-than-expected yields of older chips over the past year or two have also hindered Samsung's efforts to compete with the industry leader, according to analysts. The business claimed in March that operations had gradually improved.

($1 = 1,292.8900 won)

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