Samsung Semiconductor, The Gap Is Even Bigger

Samsung Semiconductor, the Gap is Even Bigger

Samsung Electronics' semiconductor division has lagged behind Taiwan's TSMC, the world's largest foundry, in sales for two consecutive quarters.

According to industry insiders on the 9th, Samsung's electronic device solutions (DS) division had sales of 30.1 trillion won and an operating profit of 2.9 trillion won in the fourth quarter of last year.

Despite weak demand for mobile and PC products, Samsung Electronics' memory business, which is its pillar business, recorded record sales in the fourth quarter, thanks to higher sales of high value-added products.

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However, due to its failure to occupy a leading position in the field of high-bandwidth memory (HBM), which has exploded demand, it is being squeezed by TSMC, which has a near monopoly on the production of Nvidia's AI chips.

TSMC's revenue in the fourth quarter of last year was NT$868.46 billion (about 38.4 trillion won), the highest quarterly performance in history. In terms of fields, high-performance computing (HPC) using artificial intelligence accounted for 53%, surpassing the previous largest share of smartphones (35%).

Last year, when the AI semiconductor market was in full swing, the sales of both companies in the second quarter were about the same, both around 28 trillion won. Subsequently, the gap widened from about 3 trillion won in the third quarter to about 8 trillion won in the fourth quarter.

In the third quarter of last year, Samsung Electronics' DS division had sales of 29.27 trillion won, and TSMC's sales were NT$759.69 billion (about 32.3 trillion won at the current exchange rate).

Thanks to the vigorous development of memory semiconductors, Samsung Electronics ranked first in the world in semiconductor sales in 2021. However, starting in the third quarter of 2022, it ceded its sales leadership to TSMC until the first quarter of 2024.

Samsung Electronics then surpassed TSMC in sales in the second quarter of last year, but TSMC began to surpass again in the third quarter as demand for AI chips increased.However, some industry insiders pointed out that it is difficult to simply compare performance. Unlike TSMC, Samsung Electronics has diversified business areas such as memory, semiconductors, and design in addition to foundry.

Samsung's 2nm, exceeding expectations

South Korean media The Bell reported that Samsung is investing a lot of resources in its self-developed processor Exynos 2600 to ensure that it is mass-produced on time.

According to the report, Samsung foundry has a higher-than-expected initial yield in the 2nm node process (SF2) test, and the yield rate is about 30% in the trial production of the Exynos 2600. Considering the ongoing optimization of the SF2 process technology, it can be said that the yield is higher than expected, and Samsung also plans to further stabilize the mass production of its Exynos 2600 in the second half of 2025.

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According to the report, SF2 is the latest process technology that Samsung's foundry division plans to launch in the second half of 2025, using the third-generation GAA technology, which is expected to improve SF2 performance by 12%, increase energy efficiency by 25%, and shrink the chip area by 5% compared with SF3 process technology. Considering Samsung's production plans, the Exynos 2600 is expected to be used in the Galaxy S26 smartphone, which is scheduled to be released in the first quarter of 2026. If the yield improvement work is stable, mass production will start in the fourth quarter of 2025 at the earliest.

The report quoted people familiar with the matter as saying that the development of the Exynos 2600 is on track. He also emphasized that Samsung's Exynos series has been well received by Samsung both inside and outside, and although the mass production of the Exynos 2500 has been delayed, the mass production of the Exynos 2600 is expected to proceed as scheduled. In particular, it was recently tested at a back-end processing company in South Korea and the yield rate was over 30%. However, due to the trial production, the yield standard is still in the early stage.

Samsung's foundry division and system LSI division are both working hard to develop and mass-produce the Exynos 2600, the people stressed the insider. If the mass production of the Exynos 2600 is delayed again after the Exynos 2500, not only Samsung, but also the Korean foundry ecosystem will also suffer a devastating blow.In fact, Samsung initially planned to use the Exynos 2500 in the Galaxy S25, but delayed mass production due to yield issues. In the end, the Samsung Galaxy S25 will only be equipped with a Qualcomm Snapdragon 8 Elite processor. In its fourth-quarter 2024 earnings conference last month, Samsung said it would continue its overall losses due to missed time-to-market for its flagship SoCs. The flagship SoC mentioned here refers to the Exynos 2500.

The report highlighted that the only known customers who will use Samsung's 2nm node process are Japan's Preferred Networks (PFN) and American AI semiconductor company Ambarella, who will use SF2X (for AI-HPC) and SF2A (for automotive). Talking about customers in the 2nm node process during the earnings call, Samsung noted that orders are being discussed with Tier 1 customers in various application areas such as mobile, HPC, and automotive.