Amid TSMC's caution regarding transactions with Chinese corporations (semiconductor design) firms, Samsung Electronics' foundry (semiconductor contract manufacturing) division is accelerating its efforts to penetrate the Chinese market. This strategy appears to be a response to weakened revenue due to sluggish orders for not only advanced processes but also mature processes.
On the 15th, according to the Hong Kong South China Morning Post (SCMP) and industry sources, TSMC blocked transactions with PowerAir, which is linked to Huawei. TSMC is reported to have suspended transactions with two Chinese foundries identified as bypass export routes for Huawei. In contrast, Samsung Electronics is actively expanding its design house partners to secure Chinese clients and revealing its foundry roadmap at local semiconductor events.
Since the 'Huawei incident', in which semiconductors manufactured by TSMC ended up being exported indirectly to the U.S.-regarded Huawei, TSMC has begun to distance itself from Chinese foundry corporations. Ahead of the inauguration of the second Trump administration, TSMC appears to be keeping a close watch on the U.S. government. It is known that TSMC has not only halted the provision of processes below 7nm to Chinese corporations but has also postponed the completion ceremony of its Arizona factory until after the inauguration of the Trump administration.
Kim Yang-pyung, a researcher at the Korea Institute for Industrial Economics and Trade, noted, "TSMC is acutely aware of the perception within its own country that it is protecting Taiwan from the threat of China, so it has no choice but to respond sensitively to the policy direction of the U.S., an ally." He added, "Even apart from security concerns, considering that major clients are American big tech corporations, it is imperative to quickly respond to movements from the U.S. government for business interests."
In contrast, Samsung Electronics, which is chasing TSMC, is making great efforts to secure Chinese clients. The utilization rate of the mature process, including 4nm, is low, aside from the advanced process below 3nm. Unlike the advanced process below 3nm, where Samsung Electronics struggles with yield rates, the mature process maintains stable yields. However, due to the impact of market stagnation, orders from clients are low, resulting in some production lines operating below 50% capacity.
An industry insider stated, "While the volume of individual Chinese corporations is not as large as that of global big tech firms, the number of companies wanting to produce is much greater," adding, "Although U.S. regulations are acting as a risk, the immediate thought is that China is the place to survive since they are not gaining an upper hand in the competition for advanced processes with TSMC."
As TSMC maintains distance from Chinese corporations, it is reported that even China’s largest foundry, SMIC, has not yet secured technology for processes below 7nm, resulting in a steady increase in inquiries to Samsung's foundry. Chinese foundry corporations such as SMIC and Huahong Semiconductor are struggling with the development of related processes due to U.S. regulations on advanced semiconductor equipment that have prevented them from acquiring extreme ultraviolet (EUV) lithography equipment, which is essential for processes below 7nm.
An industry insider stated, "It is true that inquiries from Chinese corporations to Samsung's foundry have steadily increased until last year. However, no substantial large-scale orders have occurred yet," adding, "Chinese foundries are also closely watching the trends of industrial policy changes ahead of the inauguration of the second Trump administration."