Saturday, November 27, 2021

Samsung plans to triple its production of chips to combat the ongoing chip shortage and effectively take on TSMC

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Samsung trailing behind TSMC in the production of chips would be an understatement, but the South Korean giant has plans to turn things around in its favor while combating the ongoing chip shortage at the same time.

During its third-quarter earnings, the company announced that it aims to triple its total chip production capabilities.

At this time, Samsung’s market share in the foundry business stands at 17%, and it is the second biggest manufacturer of semiconductors. However, its biggest rival in this industry, TSMC, stands tall with a 53% market share. With that being said, Samsung has a ton of ground to cover, and as per Nikkei Asia, it plans on reducing that disparity by tripling its chip production efforts.

Han Seung-hoon, a Samsung executive, said the following during the company’s earnings conference call. “We plan to expand our capacity about three times by 2026 to meet customers’ needs as much as possible by expanding capacity in Pyeongtaek as well as considering establishing a new plant in the U.S.”

Samsung’s efforts are not just limited to its home turf in South Korea but have extended to the U.S. too. According to a previous report, the company was close to finalizing its $17 billion chip plant in Texas, and that is not the only ambition the chip manufacturing giant has laid out.

Back in 2019, Samsung had made public its plans to invest $115 billion by 2030 to gain an edge in the mobile chips category and take on not just Qualcomm, but Apple as well.

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The company also announced previously that it plans on mass producing 3nm chips in the first half of 2022. These 3nm chips will offer a 35% performance jump and 50% power savings compared to its 7nm LPP nodes, but it is not confirmed how it will perform against TSMC’s own 3nm nodes.

The efforts to triple chip production will also be beneficial to be the chip shortage situation under control, the shortage has forced TSMC to not just introduce price hikes for its next-generation wafers but also to start prioritizing partners who are not stockpiling chips.

Bringing some much-needed competition to the foundry business will encourage competition, forcing both manufacturers to push forward in bringing cutting-edge chips to the market while also giving options to companies like Apple and Qualcomm.

Relying on a single manufacturer can stifle competition, but Samsung’s goal will not reach completion in a few days, but it has plans to triple chip production by 2026.

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