Samsung promotes chip-generation industry reshuffle

According to foreign media articles, Taiwan’s “father of the semiconductor industry” Zhang Zhongmou has not been optimistic about Samsung’s move into the chip-generation industry. However, he currently believes that Samsung Electronics is the “700-pound gorilla” in the industry and has strong financial strength.

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The rise of Samsung reflects the rapid change of Asian chip-generation industry. In this industry, speed, creativity and financial strength play an important role, and the major chip companies are following the pace of consumers, from the manufacturing of computer chips to the manufacture of chips for mobile devices such as the iPhone and iPad.

Although Intel is still a leader in this industry and has a leading edge in chip manufacturing technology for two years, the chip industry is experiencing the largest reshuffle in 10 years. .

The rising cost of Japanese companies once led the industry. However, due to rising costs and strong competition from Samsung and TSMC, Japanese chip companies are facing difficulties. Take Elpida and Renesas Electronics as an example. These companies have technology but lack the funds to make continuous investments in plant and technology upgrades.

LenJelinek, head of research at the semiconductor manufacturing industry at IHSiSuppli (LenJelinek), said: "With the development of technology, a single company cannot independently assume the cost of building an advanced production line. The cooperative foundry model is a good way to solve the cost problem." Modern chip manufacturing plants often require billions of dollars in investment.

IHSiSuppli predicts that by the year 2015, the revenue of the chip foundry industry will reach US$42 billion, which is higher than the current US$30 billion, accounting for 10.8% of the entire chip industry. In addition, by 2015, the capacity of chip-based industrial and commercial enterprises will account for 1/4 of the entire chip industry, which is higher than the current 1/5.

TSMC and UMC are the two most important global chip companies. Zhang Zhongmou created TSMC in 1987. According to Gartner's data, the company had revenue of 14.5 billion U.S. dollars last year, a market share of 49%, and a scale of 4 times that of UMC. Another important chip foundry is GlobalFoundries, which was spun off from AMD. The company is backed by the Abu Dhabi Sovereign Fund and last year revenue was $3.58 billion. China’s SMIC and Israel’s Towerjazz also ranks in the front row.

Technology Upgrade As consumers gradually move to mobile devices, the demand for small-sized, low-power chips has begun to increase in the market. Therefore, chip-to-chip business also needs a technological transformation. These vendors need to pay more attention to logic or system chips. Samuel Wang, chief analyst of the semiconductor manufacturing industry at Gartner, said: "The most advanced technology is not driven by computers but by mobile processors. This is the first time in the semiconductor industry."

The most critical issue for chip foundry is to improve the technology and reduce the distance between the transistors on the chip. At present, TSMC and other leading commercial and industrial companies are beginning to introduce 28-nanometer technology, and Intel's latest IvyBridge chip adopts a 22-nanometer process. Both TSMC and Samsung are currently developing 20-nm processes, but so far this process is still unstable. A 28-nanometer production line requires $5 billion in investment.

Samsung’s share in the memory chip market is close to 50%, and the company is shifting some production lines to the production of non-memory chips, such as those used in Apple products and Galaxy smartphones. In the non-storage chip field, Samsung's competitors include Intel, Qualcomm, Broadcom, and ARM, and other professional chip design companies.

Samsung’s chip foundry business ranks ninth in the world. The market share is 1.6%. With Samsung developing to logic chips, the company’s market share is expected to increase. Samsung is one of the few companies with sufficient funds and capabilities to challenge TSMC in technology. Samsung is currently a Qualcomm foundry chip, but in the future it may also attract customers who originally belonged to TSMC, such as Texas Instruments and Nvidia. The capacity of TSMC's 28-nanometer production line currently cannot meet its demand well.

From January to March this year, non-memory chips accounted for nearly 40% of Samsung Semiconductor's total revenue. This year, Samsung's investment in non-memory chips will exceed investment in memory chips for the first time.

ClarkTseng, senior manager of SEMI market analysis at the chip industry organization, said: “In the future, Samsung will gain a greater share in the foundry industry.” He believes that TSMC and Samsung will be first-tier manufacturers in the chip foundry industry. Taiwan United Electric and GlobalFoundries will be in the second-line camp.

The competition is fiercer. However, Samsung also has its own "Achilles heel": the company competes with potential chip foundry customers in areas such as smart phones, so these companies may not want Samsung to make their own OEM chips. . Samsung and Apple had a recent patent dispute. However, Samsung also made OEM chips for Apple. Therefore, the relationship between the two parties appears sensitive and complicated.

So far, smaller chips have not given up on their efforts. UMC has invested US$8 billion to build factories in Taiwan. GlobalFoundries has participated in the bid for Elpida, and SMIC has received support from the Chinese government.

Although he is over 80 years old, Zhang Zhongmou still has no plans to withdraw from the chip foundry industry he pioneered. He will also face challenges in the future. Zhang Zhongmou recently said in Taipei: "I will not fear. If I fear, then I will not do it from the beginning."

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