Samsung Woos US Chip Buyers With Tech Advances, Texas Focus

    Samsung Electronics Co. announced an aggressive five-year plan to lure US chip buyers with more advanced technology.
    By: BLOOMBERG
    | Updated on: Oct 04 2022, 23:57 IST
    Samsung
    Samsung shares rose 4% in Seoul on Tuesday after falling by almost a third this year with rising costs and a downturn in the memory market. (AFP)
    Samsung
    Samsung shares rose 4% in Seoul on Tuesday after falling by almost a third this year with rising costs and a downturn in the memory market. (AFP)

    Samsung Electronics Co. announced an aggressive five-year plan to lure US chip buyers with more advanced technology, aiming to produce transistors that are just 1.4 nanometers wide by 2027.

    The company's chip contract-manufacturing unit -- known as a foundry -- is looking to triple its revenue by that year from the 2021 level, Executive Vice President Moonsoo Kang said at a briefing Monday in San Jose, California. To get there, the business will need to make several technological leaps and further inroads in the US market for outsourced chips.

    Samsung shares rose 4% in Seoul on Tuesday after falling by almost a third this year with rising costs and a downturn in the memory market.

    The Suwon-based company is the world's largest chipmaker by revenue, but its foundry business is playing catch-up with Taiwan Semiconductor Manufacturing Co., which has a commanding lead in the market and top-of-the-line production capabilities. Samsung recently lost out to TSMC on an Nvidia Corp. order to produce the RTX 40 series of graphics cards, which moved to a 4-nanometer process.

    Originally a latecomer to the foundry business, Samsung's been in a hurry to advance its technology ahead of expanding capacity. The Korean chipmaker now sees its 3nm chip process as its “game changer,” Kang said, and first started production at that node ahead of TSMC. It's pouring three times more resources into 3nm production than it did with previous tech generations in an effort to meet client demand.

    Samsung executives at the briefing said the company's yields -- the percentage of functioning chips per production run -- are now among the best in the industry. And it's racing to stay on the cutting edge of technology. The company aims to take the lead in advanced chipmaking by starting mass production of second-generation 3nm chips in 2024 and then 2nm parts in 2025. That will set the stage for the 1.4nm products two years later.

    Part of Samsung's pitch to US customers is its decision to manufacture in America. Samsung has an existing plant in Austin, Texas, and is building one in the nearby city of Taylor. That new plant, which is set to begin operations in 2024, is likely to use the latest production methods, such as 3nm technology.

    What Bloomberg Intelligence Says

    Growth at global foundries, led by TSMC and Samsung, may exceed semiconductor averages in the coming decade, we believe. Beyond leveraging the rise of fabless chipmakers, the foundries may fuel growth with more orders from integrated device manufacturers. By outsourcing jobs to multiple foundries, fabless chipmakers may enjoy the benefits of improved supply security, lower costs, quicker product switches and better manufacturing technology support than producing chips at in-house facilities.

    Samsung also aims to triple its capacity of leading-edge manufacturing by 2027. It has no plans to add to its limited availability of older types of production.

    But TSMC is also beefing up its US presence. And Intel Corp., which Samsung overtook to become the world's biggest chipmaker, is adding capacity in both the US and Europe -- part of an effort to balance the industry's heavy reliance on Asian manufacturing.

    Samsung could become an even bigger manufacturer in Texas if needed, Kang said. The company has secured enough sites in the region to let it grow to meet demand.

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    First Published Date: 04 Oct, 23:57 IST
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