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Global Semiconductor Industry: Samsung and TSMC in the 3nm Race

GOOVER DAILY REPORT 6/3/2024
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TABLE OF CONTENTS

  1. Introduction
  2. Samsung's Push for 3nm Technology
  3. Comparison of 3nm Technologies: Samsung vs. TSMC
  4. Yield Performance and Technological Refinements
  5. Market Implications and Future Outlook
  6. Glossary
  7. Conclusion
  8. Source Documents

1. Introduction

  • This report examines the current state and past developments in the global semiconductor industry, focusing on the competition between Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC) in 3-nanometer (3nm) technology.

2. Samsung's Push for 3nm Technology

  • 2-1. Samsung's Exynos 2500 and 3nm GAA Technology

  • Samsung Electronics is set to begin mass production of its 3nm GAA (Gate-All-Around) based mobile application processor (AP), named Exynos 2500, in the latter half of 2024. This processor is expected to be used in the upcoming Galaxy S25 series, reinforcing the importance of on-device AI capabilities in Samsung's newer models. The GAA technology, which Samsung is the only foundry to have adopted, enhances data processing speed and power efficiency compared to the traditional FinFET process, and is seen by the industry as a potential means for Samsung to close the gap with its competitor, TSMC.

  • 2-2. Samsung's Market Strategy and Key Partnerships

  • Samsung aims to leverage its advanced GAA technology to attract major customers. Currently, TSMC leads the market with a significant number of clients, including NVIDIA, Apple, and Qualcomm. However, Samsung intends to secure key contracts, especially focusing on high-performance, low-power AI chips. Achieving a stable yield rate in the 3nm process is crucial for Samsung to establish trust among potential clients and to compete effectively against TSMC.

  • 2-3. Challenges Samsung Faces: Yield and Stability Issues

  • One of the critical challenges Samsung faces in mass-producing 3nm chips is the yield rate. Reports from various sources, including Asian Times and EET-China, indicate that Samsung's current yield for 3nm GAA technology is approximately 20%, meaning 8 out of every 10 chips are defective. In comparison, TSMC's yield for its N3B process is around 55%. Achieving a stable and higher yield rate is necessary for Samsung to profit from its 3nm technology and to meet industry standards. Internally, Samsung is prioritizing yield improvement, especially targeting a 70% yield for their 3nm 1st generation process and aiming for 60% yield for the 2nd generation by the first half of 2024. Ensuring yield stability is vital for Samsung to maintain its competitiveness in the advanced semiconductor technology market.

3. Comparison of 3nm Technologies: Samsung vs. TSMC

  • 3-1. TSMC's Leadership in 3nm: N3 and N3E Processes

  • TSMC started mass production of their first generation 3nm process, N3 (also referred to as N3B), in the fourth quarter of 2022. This was followed by the second generation, N3E, which improved power, performance, and area metrics and began mass production in the fourth quarter of 2023. Products using TSMC's N3E process include Apple's M4 chip and are expected to include Apple's A18 processor, Qualcomm's Snapdragon 8 Gen 4, and MediaTek's Dimensity 9400. Despite expanding production capacity, TSMC's 3nm production yield at 55% couldn’t meet the high demand, indicating a robust client base including tech giants like NVIDIA and Apple.

  • 3-2. Samsung's GAA Technology vs. TSMC's FinFET

  • Samsung distinguishes itself by utilizing the Gate-All-Around (GAA) technology, which offers an advance over the FinFET technology employed by TSMC. The GAA process improves data processing speed and power efficiency by allowing the transistor gate to surround the channel on all four sides. Samsung's 3nm technology, first used in the Exynos 2500 for smartphones, faces challenges with lower yield rates reportedly in the 20% range. In contrast, TSMC’s FinFET-based N3B process boasts a 55% yield, indicating higher production stability.

  • 3-3. Market Share and Client Base: Samsung and TSMC

  • In the competitive landscape of 3nm technology, TSMC leads with significant orders from companies like NVIDIA and Apple. TSMC’s client base is strong, and the company is expanding its production facilities to meet the high demand. Meanwhile, Samsung aims to close the gap with its innovative GAA process and has initiated mass production of its Exynos 2500 intended for upcoming Galaxy series smartphones. Despite the technical advancements, Samsung struggles with yield stability, which affects its ability to match TSMC’s production capabilities.

4. Yield Performance and Technological Refinements

  • 4-1. Yield Performance: Samsung and TSMC

  • Samsung and TSMC have been facing challenges in yield performance for their 3nm technology. According to reports, Samsung's current 3nm first-generation process yield is about 60%, which is below the minimum 70% required for substantial profitability. Similarly, TSMC's yield also falls below 60%. To secure major clients like Apple, yields need to exceed 70%. While Samsung's 4nm yield has surpassed 70%, allowing it to support the Exynos 2400 in the Galaxy S24, TSMC leads the market with a 59% market share, compared to Samsung's 13%, mainly due to its success in 4-5nm processes.

  • 4-2. Advanced Node Development: From 3nm to 2nm and Beyond

  • Samsung has been leveraging its GAA (Gate-All-Around) transistor technology, first applied in its 3nm first-generation process. GAA technology wraps the transistor channel with four surfaces, compared to the three surfaces of the FinFET structure used by TSMC in its current 3nm process. Both companies aim to start 2nm production soon, with TSMC planning to adopt GAA technology at that stage. Despite current challenges, experts believe that Samsung's early adoption of GAA could provide a technological edge as it moves towards 2nm.

  • 4-3. Technological Partnerships and R&D Efforts

  • Samsung is collaborating with global EDA (Electronic Design Automation) company Synopsys to design and develop 3nm SoC (System on Chip) products. Despite the challenges in achieving high yields and performance, Samsung’s efforts include significant R&D investments and partnerships to improve their competitiveness. TSMC continues to diversify its 3nm processes, including variants like N3E, to attract more clients. Samsung, on the other hand, is focusing on enhancing its GAA technology to close the performance gap with TSMC.

5. Market Implications and Future Outlook

  • 5-1. Impact of 3nm Technology on Global Market Dynamics

  • The global semiconductor industry is witnessing substantial shifts due to advancements in 3nm technology. Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC) are at the forefront of this transformation. In 2022, TSMC began mass production of 3nm chips, known as 'N3', and has since introduced improved versions such as 'N3E'. These chips have found applications in high-demand products from major companies like Apple and Nvidia, with TSMC struggling to keep up with the overwhelming demand. On the other hand, Samsung is leveraging its cutting-edge 3nm Gate-All-Around (GAA) technology, marking it as the only foundry to adopt this advanced method. However, Samsung has faced challenges with yield rates, significantly lagging behind TSMC's 55% yield with its 20% yield for the 3nm process. Despite this, Samsung is committed to stabilizing these yields to compete more effectively in the market.

  • 5-2. Client Dependency and Diversification Strategies

  • Both Samsung and TSMC heavily rely on a few key clients for their 3nm technology. TSMC has secured orders from tech giants like Apple, Nvidia, and Qualcomm for its advanced 3nm processes. The company's capacity expansion with seven new factories underscores its commitment to meeting the rising demand from these clients. Conversely, Samsung is focusing on securing notable clients like Nvidia, Apple's competitors, and Qualcomm by enhancing its 3nm GAA technology. Samsung also aims to diversify its client base beyond mobile applications by targeting high-performance computing (HPC) and automotive industries. Given the volatile nature of the memory market, Samsung's strategy includes bolstering its foundry operations to stabilize overall company performance.

  • 5-3. Current Data Analysis: Opportunities and Threats

  • Analyzing current data reveals both opportunities and threats for Samsung and TSMC in the 3nm race. TSMC's advancements in 3nm technology, including the successful launch of 'N3E' with a yield rate of up to 55%, position it favorably in the market. Samsung, although pioneering with the GAA technology, faces significant hurdles with an initial 20% yield rate. Furthermore, the advanced GAA technology adopted by Samsung offers potential long-term benefits, such as superior power efficiency and processing speeds. Achieving stable yields will be crucial for Samsung to close the gap with TSMC. Both companies are eyeing future nodes like 2nm, with TSMC planning to incorporate GAA in its future processes. The competitive dynamics and client dependency underscore a pivotal moment in the semiconductor industry as both companies strive to address these opportunities and threats.

6. Glossary

  • 6-1. 3nm GAA Technology [Technology]

  • Samsung's Gate-All-Around (GAA) technology provides enhanced data processing speed and energy efficiency compared to traditional FinFET processes. This technology is pivotal for Samsung's 3nm strategy, potentially reducing the performance gap with TSMC.

  • 6-2. TSMC N3E [Technology]

  • TSMC's second-generation 3nm process, N3E, offers improved power, performance, and area (PPA) metrics over the first-generation N3. It is primarily used in TSMC's high-profile client applications, such as Apple’s M4 and A18 chips.

  • 6-3. Exynos 2500 [Product]

  • Samsung's upcoming mobile application processor (AP) based on 3nm GAA technology, expected to be deployed in the Galaxy S25 series. Its development marks a critical effort by Samsung to enhance its mobile AP performance and compete with TSMC.

7. Conclusion

  • The competitive landscape in the semiconductor industry is principally shaped by the advancements and yield performances of 3nm technology. Samsung and TSMC continue to push the boundaries of innovation, each striving to capture a larger market share and secure key clients.

8. Source Documents