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SEOUL – Samsung Electronics will expand its Texas semiconductor factory to accommodate next-generation manufacturing equipment as it seeks to wrest the title of the world’s largest chipmaker from Taiwan Semiconductor Manufacturing Co.
TSMC has already announced a plan to build a new plant in the state of Arizona. As the United States and China vie for high-tech supremacy, the two Asian giants are increasing spending to grab a larger slice of the US market, which is home to leading tech companies like Google, Facebook and Amazon that design their own chips. but use contractors for production,
Samsung sees its Austin, Texas plant as playing a vital role in attracting orders from US tech companies. City officials recently began reviewing Samsung’s request to relocate a newly acquired 440,000-square-meter parcel, roughly 40% of its existing campus there, for industrial use. Samsung has said that the expansion is part of its preparations for the future, although it has not yet decided how much capacity it will add there and when.
“To become the world leader, Samsung needs to attract orders from Apple, Intel and others” who currently work with TSMC, said Lee Seung-woo, chief analyst at Eugene Investment & Securities.
Samsung’s Austin factory began mass-producing memory chips in 1997. It entered contract manufacturing in 2010, with a list of customers that at one point included Apple.
Despite the fact that Samsung invested $ 17 billion in the installation during its useful life, the equipment has become obsolete. The factory is believed to only be capable of producing chips with 14 nanometer process nodes, an advanced technology about five years ago, but three generations behind the 5 nm process that is now a pioneer in the industry. The company could end up investing about $ 10 billion in advanced equipment needed for large-scale new orders.
Samsung views the Austin plant expansion as an important step in its goal of becoming the world’s largest foundry. (Photo courtesy of Samsung Electronics)
Contract chipmakers often don’t purchase new equipment until after signing long-term supply agreements with their customers. But Samsung is expected to upgrade its facilities as it searches for new orders, and is also hiring chip-related engineers across much of Silicon Valley.
Samsung has announced plans to invest 133 trillion won ($ 121 billion) towards its goal of becoming the world leader in memory semiconductors and logic chips by 2030. It is increasing production capacity at its South Korean factory in Pyeongtaek. and could develop advanced chip making technologies. at home to the Austin plant too.
TSMC is currently at the forefront technologically. The company was months ahead of Samsung in mass production of 5nm chips, which it supplies to Apple. TSMC also “has a significant technological advantage over Samsung in terms of performance,” according to a chip-making equipment maker.
TSMC had a 54% market share in foundry services in the July-September quarter, compared with Samsung’s 19%, according to Taiwanese research firm TrendForce. TSMC also leads in terms of market capitalization, despite having only one sixth of Samsung’s total revenue.
The Taiwanese company announced in May that it would build a new $ 12 billion chip plant in Arizona, which will begin next year and is scheduled to come online in 2024. But it is unclear whether the project, which has been heavily subsidized by the The Trump administration will continue as planned under President-elect Joe Biden.
Samsung may delay carrying out specific plans regarding Austin’s expansion until it has a better idea of Biden’s policies regarding the semiconductor industry. Although the United States has advanced knowledge in chip design, Taiwan and South Korea are now the dominant players in production technology. The United States wants to see Samsung expand production capacity within its borders, in response to China’s state-backed campaign to boost domestic chip production.
Meanwhile, Samsung is also investing in its chip factory in Xi’an, China. With the tensions between Beijing and Washington showing no signs of abating, the world’s semiconductor companies face increasing pressure to find the right balance between the two superpowers.
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