Semiconductor craftsman Samsung Electronics, which designs customized chips for Google. Review Hwang Jung-soo’s semiconductor issues

Samsung Electronics is expanding its business to design semiconductors as’customer-customized’. Until now, it has intensively fostered the foundry (semiconductor consignment production) business that receives orders from customers and makes semiconductors, but in the future, it plans to actively jump into the business of’designing’ customized semiconductors. In its recently announced business report, Samsung Electronics declared that it will expand new businesses such as Custom SoC (customer-specific semiconductors).

In terms of suits, Samsung Electronics has so far △designed and produced a suit (semiconductor) for the person to wear, and △customized suits for customers were only “produced” (foundry). In the future, it means that it will also start a business to’design’ customers’ clothes in earnest. This business is undertaken by Samsung Electronics’ System LSI Division, which has strengths in semiconductor design. Of course, unlike customized tailor shops in reality, it is analyzed that Samsung Electronics will conduct design business centering on major large customers.

“We also develop semiconductors” IT companies that follow Apple

Samsung Electronics’ strengthening of its customized design business is related to the recent trend of the global semiconductor industry. Recently, world-class information and communication technology (ICT) companies such as Google, Amazon, and Facebook are actively engaged in’developing semiconductors themselves (original). This is to improve the performance of products by developing semiconductors optimized for their own devices. There is also a willingness not to be bound by the product development schedule of semiconductor companies such as Intel.

Apple was the first to make this move in earnest. Apple developed its own AP’A’ series for the iPhone from the mid-2000s. It is also recognized for its performance. The’A14 Bionic’ chip in Apple’s iPhone 12 is evaluated to be superior to rivals Snapdragon (Qualcomm) and Exynos (Samsung Electronics).

Apple, which gained confidence, has been putting its own semiconductor’M1′ chip into its laptop Mac (Mac) since last year. It is to increase performance by developing a processor that is independent from Intel’s CPU (central processing unit) and optimized for Mac.

ICT companies that have watched Apple’s success are eager to develop their own semiconductors. Recently, even Chinese information technology (ICT) companies have joined.

Following Baidu, which is called’Google of China’, Byte Dance, famous for its video platform’TikTok’, is also seeking to enter the semiconductor business. It is known that Byte Dance is currently recruiting development personnel focusing on server semiconductors.

Google in the US and Baidu in China are also left to develop with Samsung

Semiconductor development is not an easy task. Accumulated technology development know-how, professional manpower, and large-scale support are essential. ICT companies such as Google, Amazon, and Baidu have sufficient funding power, but lack semiconductor design and manufacturing technology. Even if it wants to make chips specialized for its products and services, it is evaluated as insufficient capacity to proceed independently.

In the past, the situation was similar for Apple. Apple chose Samsung Electronics. Steve Jobs, who was planning to launch the iPhone in the early 2000s, and Hwang Chang-gyu, the former president of Samsung Electronics, who led the semiconductor business of Samsung Electronics at the time, signed a contract for’iPhone AP joint development’ and’Samsung Electronics to supply all APs’. Since then, from the first generation iPhone AP in 2007 to the’A5′, the AP that entered the iPhone 4S, the two companies have actually made it together. Production took place at the strategic Samsung Electronics foundry factory. They gave and received gifts.

For this reason, Samsung Electronics is selected as a company that can help develop semiconductors such as Google. Samsung Electronics is a comprehensive semiconductor company. It has a system LSI division in charge of designing system semiconductors (semiconductors in charge of computation, communication, etc.) and a foundry division in charge of manufacturing. Foundry companies like Taiwan’s TSMC also provide their customers with experience and know-how in design and design, as well as production, but the industry is evaluating that it cannot be considered better than Samsung Electronics’ System LSI Division, which specializes in design.

Samsung Electronics’ not directly competing with Google, Amazon, and Baidu is also evaluated as a positive factor in entering the’customer design’ business. Samsung Electronics’ flagship products are memory semiconductors such as DRAM and NAND flash. It is a strong complement to server chips and AI (artificial intelligence) chips that ICT companies such as Google are trying to develop. When high-performance AI chips are released, more memory semiconductors are needed to support them. From Samsung Electronics’ perspective, it is a’win-win’.

The foundry, another flagship business of Samsung Electronics, can also benefit directly. ICT companies do not have semiconductor production plants, so they need a foundry to produce their own chips. Chip design and production are organically linked. If Samsung Electronics helps with the design, there is a high possibility that it will naturally cooperate with production (foundry).

Some are also concerned. There is concern that non-semiconductor companies’ entry into the semiconductor industry will erode the market and reduce performance of existing semiconductor companies such as Samsung Electronics and Intel. It is argued that in the mid to long term, most semiconductor companies will become a’boomerang’ to Samsung Electronics and return in the mid to long term amid fierce competition for the AI ​​semiconductor market.

Positive about Samsung Electronics foundry orders

It is known that Samsung Electronics is making results in the chip business tailored to its customers, despite the facts. Samsung Electronics’ Foundry Division consigned production of Baidu’s AI chip’Kunrun’ last year. Baidu is currently pursuing a plan to separate and list business units that develop Kunlun and others. For this, it has raised about 2 trillion won so far. As Baidu’s AI chip business grows, it is analyzed that there is a high possibility that cooperation with Samsung Electronics will be strengthened.

Google, Facebook, and Tesla are also developing their own chips with Samsung Electronics. Recently, news came out that Google and Tesla left Samsung Electronics to develop chips for autonomous vehicles.

Samsung Electronics recently started to strengthen the capabilities of its customer-customized chip (Custom SoC) business. At the end of last year, the custom SoC team leader was also raised from managing director to managing director in regular executive greetings. Samsung Electronics entrusted Executive Vice President Lee Tae-won as the head of the Custom SoC business team. Mr. Lee is from Qualcomm, an American semiconductor design company (fabless), and has been working at Samsung Electronics since January 2020 after serving as the president of Qualcomm Korea.

Seongwoo Kim and Kyungil Sun, who were in charge of designing automotive semiconductors, also joined the Custom SoC Business Team. Since the beginning of last year, it has become a small organization with a total of five executives, including Park Jin-pyo and Park Bong-il, who have worked for this team.

Reporter Hwang Jeong-soo [email protected]