Samsung Yield Issues May Widen Gap with TSMC

The global semiconductor industry is set for a significant shift this year as leading semiconductor and IT companies adopt the advanced 3nm process technology. The majority of major orders are expected to be directed to TSMC, which could further expand the market share gap between TSMC and Samsung Foundry.

Industry insiders report that as of June 17, top companies such as NVIDIA, AMD, Intel, Qualcomm, MediaTek, Apple, and Google have already transitioned to TSMC’s 3nm technology. Despite aggressive efforts by Samsung Foundry to secure orders from Google and Qualcomm, both companies ultimately selected TSMC for their 3nm needs.

Google’s Tensor processors, previously manufactured by Samsung Foundry through the fourth generation, will now be produced by TSMC starting with the fifth generation using the 3nm process. Last year, it was widely anticipated that Qualcomm's Snapdragon 8 Gen 4 chips would also be outsourced to TSMC for production.

Samsung had announced the mass production of its 3nm process three years ago but has encountered difficulties in customer acquisition. In June 2022, Samsung was the first to commence mass production of the 3nm Gate-All-Around (GAA) process. However, the first-generation 3nm node (SF3E) has underperformed in terms of yield and efficiency, finding limited use mainly in niche markets such as cryptocurrency mining. Additionally, reports indicate that the yield rates for the Exynos 2500, developed by Samsung’s System LSI division using Samsung Foundry's 3nm process, have been disappointing.

Experts in the industry point out that Samsung Foundry’s 3nm process faces challenges related to low yield and energy efficiency. Despite efforts to control power consumption and heat generation, Samsung’s performance still lags 10%-20% behind TSMC. As AI services expand in both mobile and server markets, chip energy efficiency has become increasingly critical.

The market share gap between TSMC and Samsung Electronics in the wafer foundry market is widening. According to TrendForce, Samsung Electronics' market share in this segment slightly declined from 11.3% in Q4 of last year to 11% in Q1 of this year. Meanwhile, despite a decline in smartphone demand, TSMC’s market share increased from 61.2% to 61.7% over the same period.

Looking ahead to the 2nm process, Samsung Electronics aims to significantly improve energy efficiency by introducing backside power delivery network (BSPDN) technology. Originally planned for commercialization post-2027, Samsung has now accelerated its timeline, targeting mass production of the 2nm process by 2025 or 2026.