[NEWS IN FOCUS] Samsung's foundry footprint keeps growing

Samsung Electronics' ambitions to become a force in the foundry or contract-chip fabrication business are bearing fruit with a big deal and a purchase of super-expensive advanced semiconductor equipment.

Samsung Electronics Vice Chairman Lee Jae-yong, second from left, looks at a manufacturing line at the headquarters of ASML during a visit to the chip equipment maker in the Netherlands on Oct. 14. [SAMSUNG ELECTRONICS]

Samsung Electronics' ambitions to become a force in the foundry or contract-chip fabrication business are bearing fruit with a big deal and a purchase of super-expensive advanced semiconductor equipment.

Qualcomm, the San Diego-based smartphone chip developer, chose Samsung Electronics to be the sole manufacturer of its latest smartphone chipset, Snapdragon 8 Gen 1. The next-generation Snapdragon will be made on Samsung’s 4-nanometer chips, CEO Cristiano Amon confirmed during a Qualcomm Snapdragon Tech Summit 2021 held in Hawaii last week.

The Snapdragon 8 Gen 1 is the successor to last year’s Snapdragon 888, and the first chipset since Qualcomm changed its naming strategy, ditching the triple-digit number system. The chipsets will be used in devices by global smartphone companies including Xiaomi, Motorola, Vivo and Sony.

Many market watchers thought Qualcomm would split the order between Samsung and Taiwan's chip giant TSMC.

Samsung’s purchase of extreme ultraviolet (EUV) lithography machines is another indication of its foundry ambitions.

EUV lithography technology, which creates process circuits that measure seven nanometers or less, enables the scaling down of complex patterns on chip wafers and enhances data transfer speeds and energy efficiency.

The Netherlands-based ASML, the world’s only producer of EUV lithography machines, shipped a total of 48 EUV machines this year. Of them, 22 were purchased by TSMC and 15 by Samsung, according to a report published by Yuanta Securities. Other companies including Intel bought the rest. Each machine costs around 200 billion won ($170 million).

At the end of last year, TSMC had a total of 40 such machine and Samsung 18.

In October 2020, Samsung Electronics Vice Chairman Lee Jae-yong met with high-ranking officials at ASML to discuss cooperation on the supply of EUV equipment. Lee and Kim Ki-nam, head of the semiconductor business at Samsung, met with ASML’s CEO Peter Wennink, and CTO Martin van den Brink.

The Yuanta report said ASML is expected to ship 51 EUV machines next year, and of them, TSMC already ordered 22 and Samsung 18. That means that by the end of 2022, TSMC will own 84 units and Samsung 51.

“TSMC and Samsung will likely order more EUV machines in 2023 and 2024, when the two companies are expected to start their investments in the U.S. and Japanese markets in earnest,” said Lee Jae-yun, an analyst at Yuanta Securities.

Late last month, Samsung Electronics confirmed it is investing $17 billion in a foundry factory in Taylor, Texas, the company’s largest single investment in the United States. Samsung Electronics plans to break ground on the site — located some 50 miles from its existing chip plant in Austin — in the first quarter of next year and commence operations in the final quarter of 2024.

Currently, Samsung is the second largest foundry after TSMC. Samsung was estimated to have a 17.1 percent share of the global foundry market in the third quarter of the year, while TSMC continues its dominance with 53.1 percent, according to data provided by market researcher TrendForce.

But Samsung is making big strides. In 2017, the Korean company only had 7.7 percent market share while TSMC had 56 percent.

BY SARAH CHEA [chea.sarah@joongang.co.kr]