Samsung Elec to triple advanced chip production by 2027, sees robust demand

SEOUL, Oct 4 (Reuters) – Samsung Electronics’ chip-to-order manufacturing business (005930.KS) said on Tuesday that it plans to more than triple its advanced chip production capacity by 2027 to meet the needs of the industry, despite the current global economic headwind to meet strong demand.

The world’s second-largest foundry after Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW) aims to mass-produce advanced 2-nanometer technology chips by 2025 and 1.4-nanometer chips by 2027, which will be used in applications such as high-power applications should computer science and artificial intelligence.

“This year there has been some progress (in raising prices) and the costs are reflecting… New orders currently being won will be awarded after 2-3 years, so the direct impact of the current atmosphere will be minimal,” said Moonsoo Kang, executive vice president of Samsung Electronics’ foundry business.

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Samsung started mass-producing chips using 3-nanometer technology in June. The company is in talks with potential customers for a 3-nanometer collaboration, including Qualcomm (QCOM.O), Tesla (TSLA.O), and Advanced Micro Devices (AMD.O), Samsung said.

Samsung, the world’s largest maker of memory chips, has struggled to meet customer expectations for foundry yields in recent years. Analysts said the company has pushed advanced technology too quickly to compete with TSMC but has suffered from less experience with the long-term customer collaboration required in contract manufacturing.

Kyung Kye-hyun, co-CEO of Samsung, told reporters his foundry business has lagged behind TSMC’s development plan and performance on 5- and 4-nanometer chips, but customers are interested in the second version of 3-nanometer chips that are to be manufactured from 2024 onwards. read more

“Since the start of 3-nanometer mass production this year, we’ve been adhering to customers’ expectations,” said Kang.

He noted that despite the current inflationary pressures, demand for advanced 5-nanometer chips and finer chips is growing rapidly due to the long-term expansion of high-performance computing, artificial intelligence, 5G and 6G connectivity, and automotive applications.

The industry might find it difficult to meet demand even if all planned investments go through, he said.

The limited number of advanced chip-making machines that can be manufactured by Dutch company ASML (ASML.AS) limits how much capacity can be added for advanced chips, Kang added.

“US customers are particularly interested in manufacturing in the United States because of the stability of the supply chain,” said Kang. “Our Taylor site is very large…It’s a good location for expansion,” he added.

Samsung is currently building a chip manufacturing facility in Taylor, Texas for operations beginning in 2024.

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Reporting by Joyce Lee; Adaptation by Richard Pullin

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