Samsung Electronics is reported to be gradually finding improvements in the 2-nanometer process it will introduce in the second half of this year, although its yield is lagging behind that of TSMC. While major customers like Apple, AMD, and NVIDIA are focusing their orders on TSMC, Samsung Electronics is preparing for a long-term strategy by prioritizing yield and 'cost-effectiveness' until next year. Internally, Samsung Electronics predicts that the demand for 2-nanometer chips will last at least three more years, and is determined to solidify its foundations in areas such as heat generation and chip performance stabilization to avoid repeating the failures of the 3-nanometer process.
According to industry sources on the 22nd, Samsung Electronics is improving the heat generation and performance of its 2-nanometer process chips at a faster-than-expected pace. While its yield lags by 20 to 30 percentage points compared to TSMC, it is reportedly performing better than initially conservative forecasts from management. A representative from Samsung Electronics' foundry division noted, 'In the case of the 3-nanometer and 4-nanometer processes, there were aspects of taking 'reckless' actions to secure the title of being the world's first, but for the 2-nanometer process, there is a growing consensus to carefully enhance the process's completeness even if it is later than TSMC.' This is because the 2-nanometer process is likely to become a mainstream process in mobile, server, and high-performance computing (HPC) for more than 3 to 4 years.
Currently, Samsung Electronics is building 2-nanometer process lines at its Pyeongtaek campus and other locations. It has also postponed the planned mass production of the 1.4-nanometer process from 2027 to 2029, focusing on increasing the yield of the 2-nanometer process. Samsung Electronics is said to be relatively advantageous for technology stabilization, as it can apply the gate-all-around (GAA) transistor technology used in the 3-nanometer process to the mass production of the 2-nanometer process. GAA is a core technology that minimizes current leakage to overcome the limitations of fine processes and to manufacture high-performance semiconductors.
In reality, mobile application processors (AP) targeted by Samsung Electronics' foundry division, such as Qualcomm and MediaTek, are in no rush to adopt the 2-nanometer process. This is due in part to the excessively high prices of 2-nanometer wafers and the judgement that reliability has not yet been secured. Furthermore, as the process improved from the existing 3-nanometer technology does not show a significant difference in performance from the 2-nanometer chips, industry insiders say there is no urgency to adopt the 2-nanometer technology at this time.
The key points are the performance and yield of the 2-nanometer mobile AP that Samsung Electronics and TSMC will mass produce in the second half of this year. TSMC plans to sequentially mass-produce volumes for Qualcomm, NVIDIA, and AMD next year, starting with the 2-nanometer mobile AP to be supplied to Apple this year. The production capacity is expected to reach 90,000 units per month. Samsung Electronics plans to stabilize both yield and chip performance while mass-producing the Exynos 2600 volume in the second half of this year.
Samsung Electronics is also being cautious about expanding production capacity. The 2-nanometer production capacity for the second half of the year is reportedly set conservatively compared to initial expectations. Similar trends are expected to continue next year. This contrasts with TSMC, which plans to double its advanced packaging (CoWoS) production capacity starting next year compared to the second half of this year. Previously, the CEO of TSMC stated, 'The demand for the 2-nanometer process is significantly exceeding that of the 3-nanometer process,' and that 'the order volume for 2-nanometer from customers is unprecedented.'
The excessive concentration on TSMC has led to observations of movements among global big tech companies to select Samsung Electronics as their second supplier. Not only are TSMC's costs for advanced process manufacturing excessively high, but the limitations in production capacity may make it difficult for customers to receive products on schedule. In fact, Samsung Electronics is reportedly in evaluation discussions regarding the mass production of its 2-nanometer process with companies like NVIDIA and Qualcomm, as well as American electric vehicle manufacturers.
A source familiar with Samsung Electronics indicated, 'Since the appointment of Vice Chairman Jeong Young-hyun, the excessive 'race for speed' strategy of Samsung Electronics' foundry division has been effectively abandoned, with the goal now being to build a solid foundation and regain market trust. The strategy of securing large volumes to change market conditions all at once has completely changed.' Starting with mobile AP, the plan is to accumulate order achievements in large chips for servers and HPC, aiming for a turnaround in 1-nanometer processes after 2-nanometer.