Samsung Electronics Co has begun building a cutting-edge chip production line intended to help it take on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the business of making chips for external clients.
South Korea’s largest company said it has started construction on a 5-nanometer (nm) fabrication facility in Pyeongtaek dedicated to its made-to-order foundry business, an arena TSMC dominates.
Based on the extreme ultraviolet lithography (EUV) process, Samsung expects the fab’s output to go toward applications from 5G networking to high-performance computing from the second half of next year, it said in a statement yesterday.
Samsung, the world’s largest maker of computer memory, smartphones and displays last year, outlined its aim of spending US$116 billion to compete with TSMC and Intel Corp in contract chipmaking, supplying customers such as Qualcomm Inc or Nvidia Corp.
Its announcement coincided with the announcement of restrictions on the sale of semiconductors made with US equipment to China’s Huawei Technologies Co (華為), a constraint that threatens more than one-10th of TSMC’s business.
“This will enable us to break new ground while driving robust growth for Samsung’s foundry business,” ES Jung, head of the contract chipmaking division, said in a statement.
Samsung first unveiled its expansion blueprint in April last year, outlining at the time its goal of hiring thousands and ramping up investment in logic chips in the years leading up to 2030.
That initiative arose as sales of smartphones and consumer electronics plateaued and competition from Chinese rivals depressed margins.
EUV is the latest and most advanced chipmaking method, requiring machines costing tens of millions of US dollars, and delivering better precision and performance in the chips it produces.
TSMC and Samsung, through its spending plan, are the leaders in developing that process and expanding into 5nm and smaller manufacturing nodes.
Before the COVID-19 outbreak, Samsung had begun collaborating with major clients on designing and manufacturing custom chips and that work was already starting to add to its revenue, a Samsung executive has said.
Its newest fab in Pyeongtaek joins another 5-nanometer facility in Hwaseong that is to begin production in the second half of this year.
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