Samsung Electronics' foundry division has suffered setbacks in processes such as 5-nanometer (nm ·1 billionth of a meter) and 3-nanometer over the past few years, and is now making every effort to lead the advanced chip market with a 2-nanometer process starting in the second half of this year. Reports indicate that the division aims to increase the yield of the 2-nanometer process to around 70% within the year to attract major clients.
Samsung Electronics' foundry division has been recording quarterly losses in the trillions of won, and on top of that, it faces the challenge of starting operations at its factory in Taylor, Texas, next year. There are concerns that if the division continues to struggle with low utilization rates and faces difficulties in securing large clients even after establishing the new foundry in the U.S., the scale of losses could grow significantly, potentially consuming the entire operating profit.
According to industry reports on the 7th, based on the management diagnosis results of Samsung Electronics' foundry division conducted by the Samsung Business Support TF and Samsung Global Research, discussions have been held with the management of the semiconductor institutional sector. It is said that a 'selection and concentration' strategy has been adopted in favor of the 2-nanometer process rather than investments in the 1-nanometer process. Sources indicate that major artificial intelligence (AI) semiconductor demand areas, including the U.S., are expected to use the 2-nanometer process as their main option for more than 2 to 3 years due to the high risk associated with the 1-nanometer process.
Currently, Samsung Electronics is actively investing in customer collaboration and networks in the U.S. while working on securing orders for the 2-nanometer process. In particular, the division is focusing on restoring the trust it lost by failing to meet promised performance and yield in the previous 5-nanometer and 3-nanometer processes. At the recently held annual event of the system semiconductor ecosystem, 'SAFE 2025,' the division announced a roadmap to focus on the 2-nanometer process, postponing the introduction of the 1.4-nanometer process due to uncertain customer demand.
The key is to stabilize the yield of the 2-nanometer process and secure local clients before the setup of the Taylor factory, which will require an investment of trillions of won. Not only should Samsung Electronics recover orders from Qualcomm, but it also needs to win contracts from major clients such as NVIDIA, AMD, and Broadcom in the big chip (server chip foundry) market, where it has shown weaknesses. The industry expects that the future of Samsung's foundry depends on whether it can raise the yield of the 2-nanometer process to 60-70% within six months and deliver the performance and pricing desired by clients.
Samsung Electronics is making moves to target big tech clients in the U.S. by hiring Margaret Han, former vice president of global procurement at NXP Semiconductors, who worked at TSMC for 21 years, as vice president overseeing the foundry business in North America. Han led North American business and client relations at TSMC and served as a senior director responsible for global external production sourcing and supply chain management in Intel's foundry division.
Samsung Electronics' 2-nanometer process technology represents a 12% improvement in performance and approximately a 25% enhancement in power efficiency compared to the existing 3-nanometer process. The industry estimates that the current yield for Samsung's foundry at the 2-nanometer level is below 30%. However, there are also internal assessments indicating an improved initial yield compared to before. Still, it remains uncertain whether it can demonstrate production efficiency and performance comparable to rival TSMC's chips at the mass production stage. TSMC is currently reported to have achieved a yield of around 60% for its 2-nanometer process.
An industry insider noted that while Samsung Electronics faces challenges in its foundry business, the fact that it is currently engaging in mass production discussions for the 2-nanometer process with multiple potential clients is a positive development. The insider explained, "After securing orders for mass production of 2-nanometer chips from the Japanese AI semiconductor fabless company PFN last year, the company has recently been actively responding to Qualcomm as well."