Samsung Wanted to be No.1
Were you aware that Samsung has ambitious plans to surpass TSMC within the next five years? Presently, TSMC holds the esteemed title of the world’s leading chip manufacturer, crafting cutting-edge chips for major players like Apple, responsible for the iPhone’s Bionic chip.
Additionally, TSMC is the driving force behind the latest Snapdragon processors, making its chips an integral component in numerous global gadgets. The current hierarchy places TSMC at the top, followed by Samsung in the second spot, and Intel in third place.
It’s worth noting that Samsung openly acknowledges TSMC’s technology is 1-2 years ahead of their own. Nevertheless, Samsung is fiercely competing to overtake TSMC within the next half-decade.
By the year 2025, Samsung plans to unveil its 2nm chips, kickstarting mass production and seamlessly incorporating them into its product lineup. Furthermore, Samsung aims to introduce 1.4nm chips by 2027. Despite these aspirations, TSMC currently maintains a substantial lead in the market.
TSMC is already gearing up to integrate 3nm chips into the forthcoming iPhone 15 Pro, which will feature the Apple A17 Bionic chip. Additionally, future Mac models are set to benefit from 3nm chips, showcasing TSMC’s technological edge.
Even Qualcomm, a former major partner of Samsung, has made the switch to TSMC for manufacturing Snapdragon chips.
Samsung grappled with thermal issues while producing Snapdragon processors in recent years, beginning with the Snapdragon 888 and continuing with the 8Gen1 series. However, the situation improved significantly when 8Gen1 and 8Gen2 were manufactured in TSMC’s foundry, ultimately leading to the shift of Snapdragon production to TSMC.
Recognizing TSMC’s 1-2 year technological advantage, Samsung has redoubled its efforts to bridge the gap.
Samsung Focus on Chips
One noteworthy point to consider is the significant decline in Samsung Electronics’ profits this year, a staggering 95% reduction. Primarily, Samsung’s core business involves manufacturing memory chips and processors, which are then supplied to various other companies.
Unfortunately, the market experienced a decreased demand, resulting in an oversupply of chips. Consequently, prices plummeted, causing a substantial decline in Samsung’s profitability. This downturn is quite unexpected for a company of Samsung’s caliber.
To address this challenging situation, Samsung is strategically shifting its focus toward its foundry business, diverting attention from its memory chip sector. This means that instead of selling chips directly, Samsung will manufacture them for specific clients.
Notably, companies like Tesla and Sony have already formed partnerships with Samsung, and AMD is planning to source chips from them in the near future. These partnerships are indicative of Samsung’s forward progress in this area.
Furthermore, Samsung has taken valuable lessons from its past experiences, especially regarding the criticism it received for its Exynos chips. To rectify this, Samsung has assembled a high-caliber team to work on what they call their “dream chip.”
This ambitious project aims to develop a chip that surpasses the flagship processors of Qualcomm, Snapdragon, and Apple’s Bionic chips in the future. Furthermore, I’d like to mention that I’ve created a video discussing Samsung’s dream chip. If you’re interested in watching it, you can find the link in the video description.
Alternatively, you can click on the popup located in the upper right corner to access the video. In the presentation, I provide a comprehensive explanation of Samsung’s dream chip. Additionally, Samsung is gearing up to efficiently design chips for augmented reality (AR) glasses and virtual reality (VR) glasses as part of its long-term strategy.
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Samsung vs TSMC
TSMC has certainly made significant progress over the years, yet it faces a crucial challenge. The majority of TSMC’s fabrication facilities (FABs) are located in Taiwan. However, many U.S. companies are hesitant to invest in Taiwan due to the ongoing geopolitical tensions between the United States and China.
The U.S. government is actively encouraging the relocation of the entire chip industry to the United States. Intel, for instance, is actively pursuing the establishment of FABs in the U.S. Samsung has also committed to building FABs in the country, with reports indicating a staggering $17 billion investment in one facility, along with $11 billion worth of cutting-edge machinery from ASML, a company specialized in manufacturing equipment for chip production.
ASML’s machines are critical for chip manufacturing, but they come at a significant cost. Moreover, these machines are energy-intensive when in operation.
In fact, Samsung’s FABs in South Korea reportedly consume 20% of the country’s renewable energy supply. The high energy demand and substantial financial investment are driving the industry’s shift toward the United States.
Samsung’s future prospects in the semiconductor industry seem promising. However, it’s important to note that TSMC still holds a technological edge.
Notable products like Qualcomm Snapdragon, Apple Bionic chips, and NVIDIA GPUs are produced by TSMC. Even the chips powering AI systems like CHATGPT are manufactured by TSMC through partnerships with companies like NVIDIA.
With the forthcoming wave of AI and associated innovations, Samsung is poised to contribute significantly to these advancements on American soil.
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Why Samsung is Doing All of This?
Samsung’s strength lies in its extensive diversification. Notably, the company’s ability to manufacture chips for mobile devices and processors for external clients showcases its foresight in navigating the unpredictable future. This strategy extends across multiple sectors, exemplified by their production of components for Apple’s iconic iPhone.
Moreover, Samsung also excels in the creation of image sensors for third-party companies while simultaneously advancing its proprietary processor technologies. In terms of revenue, their component business outshines even their popular Galaxy smartphones.
Samsung’s overarching strategy revolves around diversifying across various industries due to the inherent uncertainty surrounding market viability.
This cautious approach is grounded in the history of companies like LG and Sony, which exited the market due to missed opportunities.
Samsung recognizes that investing now may not yield immediate success, but it positions them to seize future prospects.
The valuable lesson from Samsung is the importance of taking proactive measures, as the perils of inaction often outweigh the risks associated with pursuing opportunities, even if they lead to failure.
Future of Samsung
Samsung comprehends this reality, and perhaps this is why it maintains a strong presence in various regions without relenting. It’s possible that this determination is what keeps Samsung persevering.
They continue to strive for advancements in their processors and foundries, holding onto the belief that progress lies ahead.
Now, the question arises: Do you believe Samsung will emerge triumphant in this competition? Share your thoughts in the comments section below. Thanks for watching and if you enjoyed this video, don’t forget to give it a thumbs up and share it with your friends. Stay tuned for more exciting tech videos. See you in the next one!