1. Opportunity to contain TSMC
2. Intel outsourcing scale’unknown’
3.’Seeing your eyes’ between the US and China
Recently, the US media are pouring out reports that’Samsung Electronics will invest more than 10 billion dollars to expand the latest foundry (semiconductor consignment production) plant in the US.’ Trusted media such as Bloomberg and The Wall Street Journal (WSJ) have also joined. It also includes details such as’investment of $17 billion’ and’operation in 2022′.
The official answer from Samsung Electronics is, “It is under review, but nothing has been confirmed.” It’s not a wife or recognition, but an awkward attitude. Analysis says that this is because Samsung Electronics’ dilemma, which has to take into account the need for TSMC checks, uncertainty about Intel’s foundry orders, and disputes between the US and China, is difficult.
The U.S. promotes unprecedented support to semiconductor factories
According to the semiconductor industry on the 24th, TSMC’s entry into the US is considered the reason Samsung Electronics is considering expanding its foundry plant in the US. TSMC announced that it will invest 12 billion dollars (about 13 trillion won) last year to build a 5 nm (nanometer, 1 nm = 1 billionth of a meter) foundry plant in Arizona. The completion date is 2024.
Foundry is a business that produces and delivers products by receiving orders from semiconductor companies with no or insufficient production facilities. The main customers are US fabless (semiconductor design company) such as Qualcomm AMD Nvidia. Recently, it announced that it will expand the use of foundry to Intel, a comprehensive semiconductor company (IDM) in the US When the latest plant of TSMC, the world’s No. 1 foundry, is built in the mainland of the United States, it is highly likely that orders from American companies will flock.
Samsung Electronics is operating a foundry plant in Austin, Texas. Mass production started in 1998, and the 14nm process is the main focus. Although there is no problem in producing general-purpose products, it is evaluated that there is a limit to obtaining the latest semiconductor orders.
The US government’s “carrot measures” are also difficult. The U.S. government is eager to attract high-tech factories related to system semiconductors and fifth-generation (5G) communications to the mainland by promoting the protection of its own industries and job creation. According to the WSJ, the U.S. government is trying to create a multi-billion dollar fund to subsidize companies that produce semiconductors on the mainland separately from the state.
There is also an analysis that it is necessary to give a’gift’ to President Joe Biden in the early inauguration and receive a’snow stamp’. If the expansion is promoted, now is the best time. Some point out that Samsung Electronics’ bold action is needed in a situation where global semiconductor companies are getting bigger.
Overinvestment also bears’risk’ for tightrope walking in the US and China
There are also many risk factors that Samsung must take. It is observed that the amount that Intel will entrust Samsung Electronics outsourcing production will be less than expected. Intel handed over the outsourcing of the graphics processing unit (GPU) to TSMC, and left Samsung Electronics to produce a motherboard chipset called’South Bridge’. This volume is about 15,000 sheets per month (based on wafer input), which is only 16% of the Austin plant’s production capacity (90,000 sheets per month). Here, Intel has professed “most of it will produce itself” regarding its core product, the central processing unit (CPU).
It should also be taken into account that Samsung has made full-scale domestic investment since last year, such as investing 10 trillion won in a foundry line using EUV (extreme ultraviolet) exposure equipment that will be built in the 2nd plant in Pyeongtaek, Gyeonggi Province. In October last year, the construction of the Pyeongtaek Plant 3, which costs about 30 trillion won, was also started. The possibility of’over-investment’ cannot be ignored. Samsung Electronics also has a painful experience in the past. In December 2012, it announced that “We will spend $3.9 billion (about 4.3 trillion won) to expand the Austin Foundry plant,” a typical case where Apple, a major customer at the time, was in trouble because it moved outsourcing to TSMC.
The dispute between the US and China is also considered an issue to be considered in depth. China is the largest market in a single country, accounting for 25.9% of Samsung Electronics’ sales (based on separate financial statements for the third quarter of 2020). In China, there are also many Samsung Electronics’ latest semiconductor production facilities, such as the NAND flash line at the Xian 2 plant. It is a burdensome situation to be seen as a’pro-American company’ in China.
Reporter Hwang Jeong-soo [email protected]