Intel and Samsung to Form Foundry Alliance Against TSMC

According to a report by the South Korean publication "Daily Economic News," Intel CEO Pat Gelsinger recently met with Samsung Chairman Lee Jae-yong to discuss potential collaboration in the foundry sector.

Since the establishment of Intel Foundry Services (IFS) in 2021, Intel has signed foundry agreements with companies like Cisco and AWS. However, it has struggled to secure orders from leading chip design clients, resulting in a continuous increase in losses within its foundry operations.

Similarly, while Samsung has operated its foundry business for many years, it has faced challenges in meeting customer demands for 3nm yield rates, which has hindered its ability to attract significant clients. As a result, the market share gap between Samsung and TSMC continues to widen. According to market research firm TrendForce, TSMC and Samsung held global foundry market shares of 62.3% and 11.5%, respectively, in the second quarter of 2024. Notably, TSMC commands a staggering 92% market share in the advanced processes of 3nm and 5nm.

If the proposed alliance between Intel and Samsung materializes, it could lead to extensive technical exchanges, shared production equipment, and collaborative research and development (R&D) efforts. Samsung brings a diverse client base and extensive experience in Arm chip manufacturing, along with its advanced 3nm Gate-All-Around (GAA) process technology. Intel, on the other hand, is poised to roll out its Intel 18A process, Foveros advanced packaging technology, and PowerVia backside power delivery technology, all of which are crucial for enhancing efficiency in artificial intelligence (AI), data centers, and mobile processors.

Both companies have manufacturing facilities in key regions, including the United States, South Korea, and China. A partnership could facilitate the sharing of production sites, particularly as advanced semiconductor export controls become increasingly stringent in the U.S. and EU. This regional cooperation would represent a significant advantage for both firms.

Experts in South Korea suggest that the potential synergies between Intel and Samsung in forming a foundry alliance could be substantial. However, given TSMC's near-monopoly in the market, the immediate impact of such a collaboration may be limited.