Samsung Electronics’ foundry (semiconductor contract manufacturing) division has effectively brought all capacity for its 4-nanometer (nm; one-billionth of a meter) process online and has begun seeking new customers for its 5-nm process. Contracts with global big tech corporations for the cutting-edge 2-nm process are being delayed, but the company is working to improve profitability by raising utilization, centered on the relatively stable 4- and 5-nm processes with steady Production yield (ratio of good chips).
According to the semiconductor industry on the 20th, Samsung Electronics’ foundry division has effectively reached full capacity for its 4-nm process as customer orders have recently increased. In response, Samsung Electronics is also ramping up sales efforts to secure new customers for the 5-nm process.
The 4-nm node is widely used, from application processors (AP) for smartphones to artificial intelligence (AI) semiconductors and chips for high-performance computing (HPC). Samsung Electronics has focused on competing with Taiwan’s TSMC in sub-3-nm cutting-edge processes, but recently has been raising utilization centered on 4 nm.
In particular, as the AI Semiconductor market expands, demand is growing for contract manufacturing of semiconductors that do not require the most advanced nodes. While cutting-edge nodes can deliver high performance and power efficiency, design and manufacturing expense is high. By contrast, the 4- and 5-nm processes can secure high performance while keeping manufacturing expense relatively low, making them usable for some AI inference semiconductors and application-specific integrated circuits (ASIC).
Samsung Electronics’ push to secure new customers for the 5-nm process is seen as a response to this shift in demand. As 4-nm capacity nears saturation, the company can propose 5 nm as an alternative depending on customers’ performance and expense requirements. A further advantage is boosting utilization of existing production facilities.
Samsung Electronics is nurturing the 2-nm process as a key growth driver of its next-generation foundry business. It plans to improve power efficiency and performance at 2 nm by using the Gate-All-Around (GAA) transistor structure first introduced at 3 nm. Still, apart from technology development, the company must prove process competitiveness through securing major customers and posting mass-production results.
Industry watchers expect higher 4-nm utilization and new 5-nm orders to contribute to near-term performance improvement at Samsung’s foundry. In the foundry business, high fixed costs from production facility investments mean utilization directly affects profitability. Especially as advanced node development and equipment investment continue, increasing utilization of existing production lines is cited as a key variable in narrowing losses.
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