TAIPEI (CNA) — Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, faces increased competition from South Korea’s Samsung Electronics Co., which is building a new chip plant that will use the advanced 5 nanometer process, according to a Bloomberg report.
The report said Thursday that Samsung is investing US$116 billion to build a 5nm wafer fab in Pyeongtaek, south of Seoul, for its made-to-order foundry business, as it seeks to take global market share from TSMC in the wafer foundry industry.
The report added that Samsung outlined the huge investment plan to boost its competitiveness against TSMC and American chip giant Intel Corp. with a focus on orders from clients such as integrated circuit designers Qualcomm Inc. and NVidia Corp. in the U.S.
According to the report, the 5nm wafer plant will use the Extreme Ultraviolet Lithography (EUV) process, the most advanced technology, which makes it possible to deliver better precision and performance, rolling out chips using machines that cost tens of millions of U.S. dollars.
The report said the new plant is scheduled to supply chips in the second half of 2021, in particular for 5G applications and high performance computing (HPC) devices.
“This will enable us to break new ground while driving robust growth for Samsung’s foundry business,” E.S. Jung, head of Samsung’s contract chipmaking division, was cited as saying in the report.
TSMC has said its sales this year have been boosted by strong demand for 5G applications and HPC devices, which is expected to continue to help the Taiwanese chipmaker outperform the global semiconductor industry.
The report said Samsung’s announcement coincided with Washington’s plan to revise its export rules to further restrict chip sales to Chinese telecom giant Huawei Technologies Inc., which accounts for more than 10 percent of TSMC’s total sales.
Even though TSMC announced on May 15 a plan to spend US$12 billion building a wafer plant in Arizona that will use the 5nm process, Keith Krach, the U.S. undersecretary for economic growth, energy and the environment, said late last week that there is no assurance TSMC will receive a license to sell chips to Huawei.
In addition to TSMC, the U.S. government had been in discussions with Samsung and Intel to build a chip factory in the country.
Commenting on the Samsung plant report, Kerry Huang, an analyst with Concord Securities, said even if the 5nm plant starts production, the South Korean rival will still be two to three years behind TSMC in terms of technology development.
The 5nm process is the latest technology TSMC produces in Taiwan, while the Taiwanese firm is also developing the more sophisticated 3nm process which is scheduled to begin production in 2022.
“I cannot ignore Samsung’s new plant as posing a threat to TSMC, but it will not be easy for the South Korean rival to challenge the Taiwanese firm’s lead in the global market,” Huang said. TSMC currently has more than 50 percent of the global pure wafer foundry business.