[Exclusive] Samsung Electronics' Winning Move 'Yield Improvement'... Seeking Market Share Recovery

Exynos 2600 Mass Production Set for November This Year
Foundry Division Eyes Revival with 2-Nanometer Process
Galaxy S26 Adoption Could Attract Major Clients
TSMC's Excessive Price Hikes... An Opportunity for Samsung

Samsung Electronics' 2-nanometer (1 nm = one billionth of a meter) process will first be applied to the 'Exynos 2600,' with mass production scheduled for November. This comes just four months after Hanjinman was appointed head of the Foundry Business Division (President). Right after his appointment, President Han ordered improvements in yield through an internal message, and it is now being evaluated that the results are emerging.

According to the semiconductor industry on the 10th, after taking charge of the Foundry Business Division, President Han reviewed the operation status of the existing 2-nanometer process dedicated organization and the production line operation methods. In particular, he revised the sales strategy to enhance technological competitiveness. While previously focusing on North American big tech companies, President Han actively expanded design house partners in various markets such as China, India, and Europe. The strategy is to increase orders for mature processes to lower fixed costs necessary for operating foundry factories and secure price competitiveness for advanced processes.

Samsung Electronics will also apply 'Gate-All-Around (GAA)' technology in the 2-nanometer process. This structure surrounds the transistor, through which current flows, on all four sides, representing an advancement over the existing FinFET technology. It has the advantage of increasing chip performance while reducing power consumption, making it favorable for high-performance semiconductors. Previously, Samsung succeeded in mass production of 3-nanometer chips using GAA technology for the first time in the world, but low yield led to poor performance.

With Samsung Electronics setting the mass production timing of the Exynos 2600 for November, attention is focused on whether it will create a rebound momentum in the foundry business. If the Exynos 2600 is successfully installed in the Galaxy S26, scheduled for release in the first quarter of next year, it is expected to serve as an example demonstrating 2-nanometer technology and supply capabilities. The industry expects that proving the stabilization of the 2-nanometer process will help Samsung Electronics attract external customers.

An industry insider said, "The 2-nanometer yield being developed at Samsung Foundry has improved much more than previously known," adding, "It is more positive than the 3-nanometer process." The 2-nanometer yield was only 20-30% at the beginning of this year but recently exceeded 40% at the wafer testing stage by post-processing companies.

Although Samsung Electronics is rapidly increasing the 2-nanometer yield, there is still a gap with the industry leader TSMC. TSMC secured an initial 2-nanometer yield of 60%. Considering that mass production usually starts at a yield level of 70-80%, stabilizing the yield by the second half of the year will be an important task.

Samsung Foundry lost leadership in advanced processes to TSMC due to failure to overcome yield issues, which became the starting point for the widening market share gap. According to TrendForce, the market share in the fourth quarter of 2023 was TSMC 61.2% and Samsung Electronics 11.3%, compared to TSMC 67.1% and Samsung Electronics 8.1% in the fourth quarter of last year. Samsung's share fell to single digits for the first time, and the gap with TSMC reached 60 percentage points.

Since President Hanjinman's appointment in November last year, the Foundry Business Division has undergone structural reform focusing on two tasks: 'enhancing technological capabilities' and 'securing customers.' Although there are opinions about withdrawing or spinning off the foundry business, Samsung Electronics plans to continue investing. Recovering technological competitiveness would allow it to establish itself as the only company capable of providing 'integrated solutions' including design, development, and production.

It is true that Samsung Electronics is lagging behind in securing major customers. However, repeated price increases by TSMC could act as a new opportunity factor. The Taiwan Commercial Times reported earlier last month that "TSMC is considering raising prices for advanced processes by more than 15% this year." This is an upward revision from the previously known 5-10%, and it is known that this policy has already been communicated to some customers.

Global fabless companies such as Nvidia, Apple, Qualcomm, and AMD are requesting production from TSMC, but foreign media reports consistently state that Apple and AMD are reviewing Samsung Electronics' 2-nanometer process due to excessive annual price increases. An industry insider said, "Foundry contracts are long-term, looking at volumes up to three years ahead," adding, "If 2-nanometer technology is proven, market share will recover to double digits."