On the 23rd (local time), Intel CEO Pat Gelsinger gave an online live briefing, “To keep pace with the growing global semiconductor demand, we invested 20 billion dollars (about 22.700 trillion won) to two semiconductor factories in Arizona, USA. “I will establish a new one” announced. The picture is a panoramic view of the entrance to Intel’s headquarters in Santa Clara, California, USA. [AFP = 연합뉴스]Intel, the world’s first integrated semiconductor (IDM) company, invested 20 billion dollars (about 22.700 billion won) in Arizona to build two factories and strengthen the semiconductor foundry (consignment production) business, and announced to Samsung Electronics. There was an emergency. In the midst of high-tech fair competition with Taiwan’s TSMC, the world’s No. 1 foundry for Samsung Electronics, Intel has emerged as a rival, with abundant design assets (IP), enormous financial resources, and full support from the US administration by Joe Biden. There are concerns that it may be difficult for Samsung Electronics Vice Chairman Lee Jae-yong to be the world’s No. 1 in system semiconductors by 2030. Intel hasn’t been leaving the foundry business at all. It is estimated that Intel is already generating trillions of won in annual sales in the foundry business. Intel has maintained a firm market dominance in the PC CPU and memory market, but since the mid-2010s, this position has been shaken and turned to a foundry.
In particular, Intel has not forgotten the painful past when it overlooked the smartphone revolution and gave Samsung Electronics the leadership of the foundry. When Apple first developed the iPhone, it tried to entrust the mobile application processor (AP) foundry to Intel, but was rejected and contracted with Samsung Electronics. This became an important stepping stone for Samsung Electronics to grow its foundry business.
Intel is expected to take full steps to clear the past sluggishness with the foundry business in earnest this time. Intel has failed to reach Qualcomm and ARM in the mobile semiconductor market, and is also losing to AMD in the PC chip market. In the midst of this, large existing customers such as Apple, Microsoft (MS), and Amazon started designing semiconductors themselves, and new growth engines are in desperate need. Pat Gelsinger, CEO of Intel, said on the 23rd (local time), “Intel is the only company with software, semiconductors, packaging and manufacturing processes that customers can trust.” “It will be able to meet the exploding demand.”
With Intel’s declaration of entry into the foundry, Samsung Electronics’ footsteps fell. In the foundry business, abundant semiconductor IP and enormous investment in facilities are essential conditions for success. Intel, which will be called the closing price of semiconductors, has accumulated vast amounts of IP for decades, from CPUs to communication and server semiconductors, Internet of Things (IoT), and memory. In addition, it is building close networks with major semiconductor design companies (fabless) such as Qualcomm, AMD, and Nvidia at the peak of Silicon Valley.
It’s not just this. The Biden administration has declared the prominence of US semiconductors, emphasizing domestic production of semiconductors. If the Biden administration fully supports it, the four major foundry customers such as Apple, Qualcomm, Nvidia, and AMD, as well as leading local information technology (IT) companies such as Microsoft, Amazon, and IBM, can entrust the foundry to Intel. Microsoft and IBM have already announced plans for cooperation with Intel’s foundry declaration. “The collaboration with IBM aims to accelerate semiconductor manufacturing innovation across the ecosystem, increase the competitiveness of the US semiconductor industry, and support key initiatives of the US government,” said Intel.
In terms of process technology, Intel is an opponent that Samsung Electronics cannot ignore. Since the commercialization of the current 14-nanometer (nm·1 nm is 1 billionth of a meter) process technology, Intel has not been able to speed up the next-generation process, lagging behind Samsung Electronics and TSMC. Samsung Electronics and TSMC are the only companies in the world to successfully commercialize advanced processes below 5 nanometers. However, Intel’s 14-nano process alone is evaluated as having performance equivalent to that of Samsung Electronics’ and TSMC’s 10-nano-class process, and Intel has not given up the process technology competition. Even if Intel commercializes the 7-nano class process as planned in the near future, it poses a great threat to existing foundry companies. Vice-Chairman Lee presented the vision in 2019, “Samsung Electronics will invest 133 trillion won to become the world’s No. 1 in the system semiconductor market such as foundries by 2030,” but the emergence of Intel may turn into a bubble. As for Samsung Electronics, in addition to competition with TSMC, Intel is also facing the situation. In particular, in order to attract US customers, it is inevitable to expand local factories. TSMC has already begun building a new 5-nano factory in Arizona with the goal of operation in 2024. Samsung Electronics has one line in Austin, Texas, but this is all of the 14-nano old process. An industry insider said, “Currently, Samsung Electronics’ 5-nano class high-tech foundry line is mostly made up of large customers such as Qualcomm and Nvidia,” and said, “To attract new customers without missing these, it is more urgent to expand the US plant.”
Samsung Electronics is in the process of negotiating final incentives such as tax incentives with the Austin authorities over a plan to expand the Austin plant worth $17 billion. Samsung Electronics is demanding a 20-year reduction over the ’10-year property tax reduction’, which is the upper limit stipulated by local laws. It is known that Austin recently proposed a 15-year reduction plan to Samsung Electronics. If Samsung Electronics accepts this, it is expected that the Austin plant expansion will take a rapid turn.
Samsung Electronics plans to operate P2, a new foundry line in Pyeongtaek, Gyeonggi-do, as early as the first half of this year. It plans to invest 30 trillion won to construct the P3 campus in Pyeongtaek. The P3 line is also likely to allocate some to the foundry. In this regard, Samsung Electronics is also pursuing a plan to actively outsource the production of old semiconductors to latecomers such as Taiwan’s UMC while maintaining its own production of advanced processes below 5nm, which are highly profitable.
[이종혁 기자 / 박재영 기자]
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