Samsung Electronics Co Ltd’s semiconductor manufacturing division has won a contract to make new Qualcomm Inc 5G chips using its most advanced chipmaking technology, two sources familiar with the matter said, boosting the South Korean firm’s efforts to gain market share against rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
Samsung is to fabricate at least some of Qualcomm’s X60 modem chips, which connect devices such as smartphones to 5G wireless data networks, the sources said, adding that the X60 is to be made on Samsung’s 5-nanometer (nm) process, which makes the chips smaller and more power-efficient than previous generations.
One of the sources said that TSMC is also expected to fabricate 5nm modems for Qualcomm.
Samsung and Qualcomm declined to comment, while TSMC did not immediately respond to a request for comment.
Best known among consumers for its smartphones and other electronic devices, Samsung is the world’s second-biggest chip manufacturer through its foundry division, self-supplying many of its own mobile phone parts and also fabricating chips for outside customers, such as IBM Corp and Nvidia Corp.
However, much of Samsung’s semiconductor revenue historically has come from memory chips, whose prices can swing wildly as supply and demand fluctuate. In an attempt to cut its reliance on that volatile market, Samsung last year announced a plan to invest US$116 billion in non-memory chips through 2030.
The Qualcomm deal shows progress in winning customers to that effort. Even if Samsung has won only part of the orders, Qualcomm represents a flagship customer for Samsung’s 5nm manufacturing technology.
Samsung plans to ramp up that technology this year in an attempt to regain market share against TSMC, which is also starting mass production of 5nm chips this year.
The Qualcomm win could boost Samsung’s foundry business, because the X60 is likely to be used in many mobile devices as they shift to 5G.
In the fourth quarter of last year, Samsung had a 17.8 percent market share versus TSMC’s 52.7 percent, TrendForce Corp (集邦科技) data showed.
On Tuesday, Qualcomm said that it would begin sending samples of the X60 chips to customers in the first quarter of this year.
Qualcomm did not disclose who would manufacture the chips and reporters could not learn whether the first batches of chips would be made by Samsung or TSMC.
TSMC was faster to ramp up high-volume production of chips using the previous 7nm manufacturing process, winning customers such as Apple Inc.
Last month, TSMC executives said that they expect to begin ramping up 5nm production in the first half and expect it to make up 10 percent of the company’s revenue for this year.
Asked during a conference call last month how Samsung would compete with TSMC, Samsung Foundry senior vice president Shawn Han said that the company planned to expand 5nm mass production by “diversifying customer applications” this year.
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