Samsung Electronics’ chip contract manufacturing business plans to more than triple its advanced chips production capacity by 2027 to meet strong demand despite current global economic headwinds.
The world’s second largest foundry after Taiwan’s TSMC is targeting mass production of advanced 2-nanometre technology chips by 2025 and 1.4nm chips by 2027, set for use in applications such as high-performance computing and artificial intelligence.
“There has been some progress [in raising prices] this year, and costs are being reflected… New orders won currently will be made after 2-3 years, so the direct impact of the current atmosphere will be minimal,” said Moonsoo Kang, executive vice president of Samsung Electronics’ foundry business.
Samsung began mass producing chips with 3nm technology in June. The company was in talks with potential customers for 3nm collaboration, including Qualcomm, Tesla and AMD, Samsung said.
Samsung, the world’s largest memory chip maker, has had difficulties in meeting clients’ expectations for foundry yields in recent years. Analysts said the company had pushed advanced technology too quickly to compete with TSMC, but had suffered from having less experience with the long-term client cooperation needed in contract manufacturing.
Samsung co-CEO Kyung Kye-hyun told reporters its foundry business had lagged TSMC’s development schedule and performance in 5nm and 4nm chips, but customers were interested in the second version of 3nm chips to be made from 2024.
“We have been keeping in line with customers’ expectations since the start of 3nm mass production this year,” Kang said.
He noted that demand for advanced 5nm and finer chips is rapidly increasing despite current inflationary pressures due to long-term expansion of high-performance computing, AI, 5G and 6G connectivity and automotive applications. The industry may find it difficult to meet demand even if all planned investments are executed, he said.
The limited number of advanced chip-making machines that can be produced by Dutch company ASML limits how much advanced chip capacity can be added, Kang added. — Joyce Lee, (c) 2022 Reuters