Samsung Electronics' foundry business is widening its customer base by expanding collaboration not only with big tech corporations such as Tesla, but also with small and midsize fabless firms in the United States, Japan, China, and Korea. As the need to overhaul a division that had logged multi-trillion-won losses for years has been noted, expectations for an earnings turnaround are growing as the recent trend of diversifying its customer mix becomes clearer.
According to related industries on the 17th, Samsung Electronics recently began producing Omni Processing Unit (OPU) chips for U.S. artificial intelligence (AI) Start - Up Chaboraite on the 4-nanometer (SF4X) node. An OPU is a next-generation processor that integrates CPU (central processing unit) and GPU (graphics processing unit) compute elements to handle AI and high-performance computing. Since late last year, Samsung Electronics has been pushing mass production on its fourth-generation, high-performance 4-nanometer (nm; 1 nanometer = one-billionth of a meter) line.
Earlier than this, Samsung has been pursuing 2-nanometer, process-based cooperation with Tesla and Apple. In Korea, AI fabless companies DeepX and Autonomous Driving semiconductor corporations Ambarella have chosen Samsung's advanced nodes, and Japan's Preferred Networks (PFN) has also awarded new 2-nanometer-based orders, expanding the customer roster. As AI spreads and demand for high-performance chips rises, analysts say customers for advanced processes are broadening from big tech to small and midsize fabless players.
New demand is also flowing in from China. Cryptocurrency mining firms MicroBT and Canaan have tasked Samsung Electronics with producing 2-nanometer application-specific integrated circuits (ASICs), and MicroBT's volumes are already said to have entered mass production. ASICs are chips optimized for specific uses, and mining ASICs have simple circuit structures, which is seen as advantageous for securing utilization in the early phases of advanced nodes.
A shift in the global foundry supply structure also supports the move in demand toward Samsung Electronics.
According to market researcher TrendForce, TSMC maintained a commanding No. 1 with a 70.2% share of the global foundry market in the second quarter this year. It is running 3-nanometer lines centered on major customers such as Apple and Nvidia, but its advanced nodes are already near full utilization, making it difficult to take new volumes. As a result, small and midsize fabless firms face heavier delivery and price burdens, and Samsung Electronics, which has comparatively available lines and price flexibility, is emerging as an "alternative," observers say.
Samsung Electronics is accelerating order wins this year on both the sales and technology fronts. In March, the company appointed Vice President Margaret Han, formerly of TSMC, as head of U.S. foundry sales to strengthen its North American outreach. Stabilized technology is also cited as a factor drawing in customers. Samsung Electronics applied the Gate-All-Around (GAA) process to 3 nanometers in 2022 for the first time in the world, but suffered customer defections due to poor initial Production yield. Since then, Samsung has prioritized stabilizing its technology and focused on improving 2-nanometer Production yield, and in its recently released third-quarter report it specified the performance gains of the 2-nanometer node for the first time, presenting its technological progress to the market.
Price factors are also prompting customers to shift to Samsung. With the possibility of price hikes for TSMC's next-generation nodes being discussed, Samsung is said to be securing new orders by offering relatively flexible pricing and supply responsiveness. Industry watchers say such elements were reflected in Tesla's decision to entrust a substantial portion of its next-generation AI6 chips to Samsung.
However, industry expectations are that whether Samsung's results recover going forward hinges on stabilizing 2-nanometer Production yield. As a rule of thumb, a yield of 60% or higher is generally considered suitable for mass production. A semiconductor industry official said, "If Samsung raises its 2-nanometer Production yield to a certain level, the normalization of utilization could become visible from the fourth quarter," adding, "With new fabless demand continuing in AI, mining, and Autonomous Driving, expansion in scale based on advanced nodes should also be possible."