Samsung’s Strategy to Compete in the Chip Foundry Market
Samsung needs a comprehensive plan to regain competitiveness in its chip foundry business. According to Korean sources, the tech giant is working on its new Exynos 2600 processor, aiming for its installation in the upcoming Galaxy S26 series next year. This will mark its first processor manufactured using a two-nanometer process , an advancement that brings significant risks.
The Two-Nanometer Race
Samsung has been plotting a roadmap for years to avoid lagging behind in the two-nanometer race . Kye Hyun Kyung, CEO of Samsung’s semiconductor division, predicted in 2023 that the company would surpass TSMC and its other competitors, including Intel, within the next five years.
This optimistic forecast mirrors sentiments at Intel. However, barring geopolitical crises in Taiwan—amid China’s pursuit of its own UVE lithography equipment—TSMC appears unbeatable for the moment. Starting in 2025, Samsung, Intel, and TSMC will all commence mass production of chips using 2nm lithography , but their starting points are vastly different.
Samsung’s Slow yet Steady Progress
Recent reports suggest that Samsung Foundry has begun mass production of Exynos 2600 chip prototypes . This processor will play a critical role for Samsung, as it will need to go head-to-head with the new Snapdragon generation from Qualcomm and the Apple A19 Pro (should that be its final name)—both produced under TSMC’s 2nm lithography .
In Europe, being a leader—or at least keeping pace—in smartphone semiconductors is crucial. Samsung has quickly abandoned its processors when their performance fell short. For instance, in 2023, the Galaxy S24 came equipped with Exynos, while the Ultra model featured Qualcomm. This differentiation underlines Samsung’s need to deliver consistently high-performing chips.
Challenges Ahead for Samsung
Samsung has achieved a wafer productivity rate of 50% for its 2nm lithography but remains far from the minimum required threshold of 70% for large-scale viability . However, there is still time to improve before 2025 wraps up.
On the other hand, both Intel and TSMC express confidence that their nodes have sufficient maturity for mass production. TSMC is even eyeing its 1.4nm lithography , expected to debut in 2028, while Samsung must show its capabilities to avoid falling further behind.
The Financial Strain on Samsung
The semiconductor division of Samsung is currently hemorrhaging money. Reports from Business Post Korea suggest a complete restructuring of the division may be in the works. By late 2024, sources indicated that Samsung Electronics had delayed the delivery of critical ASML equipment for its new chip manufacturing plant in Taylor, Texas. This facility represents Samsung’s strategy to attract U.S. clients seeking alternatives to dependencies on Taiwan or Korea.
Sources indicated that the facilities were not yet ready to accommodate EUV systems , essential for manufacturing under advanced lithographic processes. Both the new factory and the 2nm lithography will be crucial if Samsung is to face the current market challenges. As China pushes its own nodes with SMIC and ASML faces restrictions on selling its most advanced machines, the global industrial balance in chip manufacturing hinges on how many players can produce at this novel scale.
Future Steps Already Taken
At the end of 2024, Samsung made substantial changes at its corporate helm, marking the largest transformation in its management. This move was indicative of the technological and competitive landscape concerning semiconductors and critical components needed to compete with giants like SK Hynix, one of the leading providers of HBM memory for NVIDIA.
To lead the market, Samsung needs clients, and to secure their business, it must regain competitiveness in not just technical or economic terms, but also geopolitical ones. Samsung is not only competing for buyers but also positioning itself as a strategic partner for the West, aiming to present a reliable alternative to TSMC. With Google betting on TSMC and abandoning Exynos, Samsung must deliver a strong message by launching the Galaxy S26 series with its own processor.
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