Samsung Electronics' foundry business and Qualcomm are widening their points of contact again over cooperation in 2-nanometer foundry (semiconductor contract manufacturing). The two companies' relationship cooled after controversy over overheating with the Snapdragon 8 Gen 1 in 2021. But with Samsung Electronics' 2-nanometer Production yield improving recently, the question of whether it will be allocated foundry volumes is expected to come into clearer view starting with the Qualcomm Snapdragon Summit to be held on the 22nd (local time) in Hawaii.
According to the industry on the 13th, Samsung Electronics and Qualcomm are discussing specifications, pricing, and process optimization, and for now the possibility is being raised that Samsung Electronics and TSMC could jointly win the order. Still, how much volume Samsung Electronics will be allocated remains uncertain. Inside and outside Samsung Electronics, Production yield and price in the process of optimizing Qualcomm's custom design are seen as the final variables, and the company is said to still show a gap with TSMC in actual performance tests.
◇ After the "overheating trauma," Qualcomm pivoted to TSMC-only production
The relationship cooled rapidly after the Snapdragon 8 Gen 1, unveiled at the end of 2021 and installed in the Galaxy S22 the following year, ran into trouble over overheating. Produced entirely on a 4-nanometer process, the chip was mired in controversy over heat and power efficiency, and as a result Qualcomm has effectively entrusted all volumes to TSMC from the follow-up Snapdragon 8+ Gen 1 through the latest Snapdragon 8 Elite Gen 5. During this period, Samsung's foundry struggled to shed the label of "unstable Production yield."
This framework began to crack as the 2-nanometer process Production yield at Samsung Electronics showed a clear improvement. The industry believes the Production yield of Samsung's 2-nanometer (SF2, SF2P) process, which stayed in the 20% range in the second half of last year, has risen to the 50%–60% range this year. Since Jun Young-hyun, vice chairman of Samsung Electronics, took office as head of the Device Solutions (DS) division, an overhaul has continued across the foundry business, and the company expressed confidence in expanding 2-nanometer orders during earnings conference calls in the first and second quarters this year.
Timing-wise, a variable is that Qualcomm plans to unveil its next-generation flagship application processor (AP), the Snapdragon 8 Elite Gen 6, and the higher-end Pro (or Extreme) Gen 6 in two tiers at the summit on the 22nd. Citing improved 2-nanometer Production yield at Samsung and TSMC's high 2-nanometer wafer prices, the industry previously said Qualcomm was reviewing joint production by TSMC and Samsung Electronics. But since last month, overseas media have increasingly suggested both models will be produced on TSMC's process, leaving Samsung's foundry out of the discussion. According to TrendForce, as of April, TSMC's 2-nanometer Production yield stood at 60%–70%, while Samsung was around 55%, leaving a gap.
◇ Production yield gap and capacity bottlenecks are the biggest variables
From Samsung's foundry perspective, the first hurdle is the Production yield gap with TSMC. While Qualcomm is said to require around a 70% Production yield as the baseline for large-scale contract manufacturing, the prevailing view is that Samsung's 2-nanometer remains in the mid-50% to low-60% range. TSMC has already secured around a 70% Production yield on its N2 process, and it has set a mass-production target of 80% for the refined N2P within this year. In a recent report, market research firm TechInsights said, "Samsung Electronics set a milestone as the industry's first to mass-produce 2-nanometer Gate-All-Around (GAA), but a task remains to close the gap with Qualcomm in design optimization."
On the other hand, Samsung Electronics holds an advantage in production capacity (CAPA). TSMC is targeting 60,000 wafers per month of 2-nanometer capacity by the fourth quarter of this year, but Apple is said to have already taken more than half of the initial allocation for iPhone 18 and M6 volumes. With 3-nanometer (N3) volumes for Nvidia and AMD effectively sold out through 2027, concerns are growing that Qualcomm may have difficulty securing sufficient volumes from TSMC when it wants.
A semiconductor industry official said, "More than the volume allocation itself, the symbolism of winning back Qualcomm's top-of-the-line would carry greater meaning," adding, "But if the overheating and Production yield controversies from five years ago recur, the relationship could cool again, so proving the stability of 2-nanometer mass production is key."