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Samsung wins Qualcomm 5G modem chip foundry order, will use 5nm manufacturing process

Source: Tencent Technology

In the past year or two, South Korea's Samsung Electronics has launched a strategic transformation. In the semiconductor business, Samsung Electronics has begun to actively expand its external foundry business and is preparing to challenge the industry giant TSMC.

According to the latest news from foreign media, Samsung Electronics has made significant progress in the field of semiconductor foundry recently, and has obtained OEM orders for 5G modem chips from Qualcomm. Samsung Electronics will use advanced 5nm manufacturing processes.

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According to foreign media reports, Samsung Electronics will produce at least a part of the Qualcomm X60 modem chip, which can connect devices such as smartphones to 5G wireless data networks. Sources said that the X60 will be manufactured using Samsung Electronics' 5 nanometer process, which makes the chip smaller and more power-efficient than previous generations.

A source said that TSMC is also expected to make a 5 nanometer modem for Qualcomm. However, it is unclear what percentage of the OEM orders Samsung Electronics and TSMC received.

For this report, Samsung Electronics and Qualcomm declined to comment, and TSMC did not immediately respond to a request for comment.

Samsung Electronics is best known among consumers for its mobile phones and other electronic devices. Samsung Electronics has a huge semiconductor business, but Samsung Electronics has been mainly producing chips for external sale or use, such as memory, flash memory and smart phone application processors.

In recent years, Samsung Electronics has begun to expand its external chip foundry business and has already produced chips for companies such as IBM, Nvidia and Apple.
But historically, most of Samsung Electronics ’semiconductor revenue comes from the memory chip business. As supply and demand fluctuate, the price of memory chips often fluctuates significantly, affecting Samsung ’s operating performance. In order to reduce dependence on this volatile market, Samsung Electronics announced a plan last year that plans to invest $ 116 billion by 2030 to develop non-storage chips such as processor chips, but in these areas, Samsung Electronics In bad situation....

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The transaction with Qualcomm demonstrates progress made by Samsung Electronics in gaining customers. Even though Samsung Electronics has only won some orders from Qualcomm, Qualcomm is also one of Samsung's most important customers for 5nm manufacturing technology. Samsung Electronics plans to upgrade this technology this year to regain market share in competition with TSMC, which also began mass-producing 5nm chips this year.

Qualcomm's contract will boost Samsung's semiconductor foundry business, as the X60 modem will be used in many mobile devices and the market is in great demand.

In the global semiconductor foundry market, TSMC is the unquestioned hegemonist. The company pioneered the business model of chip foundry in the world and seized the opportunity. According to a market report from Trend Micro Consulting, in the fourth quarter of 2019, Samsung Electronics' semiconductor foundry market share was 17.8%, while TSMC's 52.7% was about three times that of Samsung Electronics.

In the semiconductor chip market, Samsung Electronics once surpassed Intel in total revenue and ranked first in the industry, but Intel grabbed the top spot last year.

Qualcomm said in a separate statement Tuesday that it will begin sending samples of X60 modem chips to customers in the first quarter of this year. Qualcomm has not announced which company will produce the chip, and foreign media is temporarily unable to know whether the first chips will be produced by Samsung Electronics or TSMC.

TSMC is ramping up its 7-nanometer process capacity on a large scale and has previously won Apple's chip foundry orders.

Last month, TSMC executives stated that they expected to increase the production of 5 nanometer processes in the first half of this year and expected that this would account for 10% of the company's 2020 revenue.

During an investor conference call in January, when asked how Samsung Electronics would compete with TSMC, Shawn Han, senior vice president of Samsung Electronics ’semiconductor foundry business, said that the company plans to diversify through“ customer application diversification ”this year. Expand mass production of 5nm manufacturing processes.

Qualcomm is the world's largest supplier of smartphone chips and the largest telecommunications patent licensing company. Qualcomm designs these chips, but the company does not have a semiconductor production line. They outsource manufacturing operations to semiconductor foundry companies. In the past, Qualcomm has used the foundry services of Samsung Electronics, TSMC, SMIC and other companies. Quotations, technical processes, and chips needed to select foundries.

It is well known that semiconductor production lines require huge investment of tens of billions of dollars, and it is difficult for general companies to get involved in this field. However, relying on the semiconductor foundry model, some new technology companies can also enter the chip industry, they only need to design the chip, and then commission the foundry foundry, responsible for sales themselves. At present, the number of semiconductor foundry companies in the world is very small, but there has been a chip design industry that includes countless companies, which has also promoted a wide variety of chips into more electronic products.


Post time: Feb-21-2020