[이슈코멘트] Samsung Electronics starts mass production of Intel chipsets at Austin Fab within 1Q

[한국금융신문 장태민 기자] According to our channel check, mass production of Samsung Electronics’ Intel chipsets started earlier than expected. Both companies have been preparing for Intel’s motherboard chipset development and mass production for the past two years, and mass production of 3-4k/mo quantities is expected to commence at S2 Fab in Austin, Texas within 1Q21.

The mass production of Samsung Electronics’ Intel foundry has the following meanings.

1) Results of long-term joint development: Although it started with mass production of chipsets (South Bridge, etc.), which are relatively low value-added products, the development/cooperation situation of the two companies, which has not been disclosed, is finally revealed on the surface.
As this mass-production case involved a long development period of more than two years, it is highly likely that the production of other new cooperative products will follow from 2H21 in the future.

2)’National assets’ principle? Production in the U.S.: Even though it is not a high-tech product that requires high technology and timeliness such as CPU, Intel outsourcing production is handled by the Texas Austin fab, not Samsung Electronics’ Giheung fab. This is interpreted as a result of reflecting national requirements as mentioned in the company’s recent Intel earnings report (4Q20 Review-‘National Asset’ Implications, Link).
The new top management recognizes that Intel’s technology and production capacity are’national’ assets, and accordingly, Intel’s outsourcing production (foundry selection) is A) has a production base in the US, and B) takes into account the security of technology leakage It is highly likely to be derived as an option. Large-scale local investment in the US is essential for foundry companies.

3) Competition is also open? Opportunity to narrow the gap? : Intel is highly likely to change from a long-standing semiconductor company (IDM, in charge of both design and production) to a hybrid outsourcing business model. In this process, the competitive relationship between TSMC and Samsung Electronics will help A) gain price bargaining power and B) alleviate uncertainties in yield and productivity after the EUV utilization stage.

Samsung Electronics will attempt to narrow the gap in foundry competitiveness, which was significantly inferior to TSMC, through ease of geographical development and large-scale allocation of capacity to Intel under the multi-consignment production system. Eventually, the stability of EUV production below 5nm will emerge as the key.

(Writer: Kim Sun-woo, Researcher at Meritz Securities)

Reporter Chang Tae-min [email protected]