[Column] Cornered K-Semiconductor, Must Bet on Technological Prowess for Survival

Samsung's 3nm Foundry Yield and Customer Acquisition Draw 'Attention'

[Asia Economy Reporter Moon Chaeseok]

"Not only fabless (design-specialized companies) but also big tech companies such as Apple and Tesla have become customers of foundry (semiconductor contract manufacturing) companies. Samsung Electronics is ahead in technology but struggling in terms of yield and securing customers. The success of developing 3nm (nanometer; 1nm is one billionth of a meter) process technology must lead to improved yield (ratio of good products) and orders from major fabless and big tech companies."

This was the reaction of Kim Yangpaeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, after news spread in the market that Taiwan's TSMC, Samsung Electronics' foundry competitor, might face setbacks in its 3nm mass production plan.

The main "battlefield" in the semiconductor market is foundry fine process technology. The "goal" of foundry companies is to secure global big tech and fabless customers such as Nvidia. As of the first quarter, TSMC and Samsung Electronics hold 53.6% and 16.3% of the foundry market share, respectively. The gap is significant. Moreover, Korea has failed in "design independence."

Ultimately, experts agree that the only real area where Korea can surpass semiconductor competitors like the US, Japan, and Taiwan is "technological capability." Even excluding political power, the US is a superpower equipped with demand companies, equipment, and fundamental technologies. Japan is strong in materials and equipment. Korea's strength lies in production, which overlaps with Taiwan and is even lagging behind. Among Korean companies, SK Hynix's foundry business is still in its infancy. Only Samsung Electronics is leading.

There is hope. According to the semiconductor industry competitiveness survey released last year by the US Center for Security and Emerging Technology (CSET), both the US and China received a "low" rating in the "EUV (extreme ultraviolet) scanner" sector. Samsung Electronics, which shipped 3nm foundry products on the 25th of last month, ahead of TSMC and Intel, is leading in the sub-7nm fine process that requires EUV lithography equipment.

Since the US sanctions on Huawei, competition among major semiconductor countries has become a "do-or-die" battle. The US is increasing pressure to incorporate supply chains not only for semiconductors but also for electric vehicles and batteries. The trend suggests that companies ranked second or lower in each sector will find it difficult to survive. Ultimately, technological capability is key. The market, governments worldwide, and the eyes of the world are focused on Samsung Electronics' 3nm semiconductor yield and customer acquisition news.