Samsung Foundry Boost Challenges TSMC with 3 nm

On July 31, Samsung Electronics held an investor earnings call and reported a significant improvement in its wafer foundry sector. The company expects demand for its foundry services to rise in the latter half of the year, driven by continued growth in AI and high-performance computing (HPC) applications. Samsung forecasts that its foundry revenue growth will exceed the overall market average.

According to recent reports, Samsung’s foundry division has experienced a recovery in key application demands, with profits showing consistent growth. For Q2 of this year, the semiconductor foundry sector saw sustained profit increases, with new orders for technologies below 5 nm on the rise. Notably, the customer base for AI and HPC applications has doubled compared to the previous year.

Samsung also highlighted progress in its 2 nm Gate-All-Around (GAA) process technology. This development is crucial for supporting client product design and preparing for large-scale production of 2 nm technology anticipated for 2025.

Looking ahead, Samsung predicts a rebound in demand during the second half of the year, with a notable increase in AI and HPC requirements. This surge is expected to drive growth in the foundry market, particularly in advanced technologies. The company anticipates that revenue from advanced technologies, including the second-generation 3 nm GAA process, will surpass market expectations.

Samsung aims to significantly expand its AI and HPC application orders, targeting a fourfold increase in its customer base and a ninefold revenue increase by 2028 compared to 2023. The company is entering its third year of producing first-generation 3 nm GAA process technology, with yield improvements. The second-generation 3 nm GAA process is slated to begin mass production in the second half of the year, initially focusing on wearable products.

To remain competitive, Samsung's U.S. foundry facility is actively working to match TSMC’s advancements. Reports indicate that Samsung plans to extend its new factory’s capabilities to 2 nm technology. Major U.S. clients, including NVIDIA, AMD, and Qualcomm, are driving Samsung to enhance its advanced process capacity and strengthen its position in the U.S. market against TSMC and Intel.

In comparison, TSMC’s Arizona facility is set to produce 2 nm chips by 2028, alongside 3 nm chips. TSMC is also establishing a third factory to meet robust customer demand.

Industry sources suggest that Samsung is considering shifting its under-construction U.S. foundry in Texas from a 4 nm to a 2 nm process, with a decision expected by the third quarter.