Samsung aims to triple production for most advanced chips by 2027

Samsung said it would start making chips with a 2-nanometer process in 2025 and a 1.4-nanometer process in 2027. These would be some of the most advanced semiconductors in the world. Samsung is in a race to catch up with market leader TSMC.

Seong Joon Cho | Bloomberg | Getty Images

Samsung said on Tuesday it aims to make some of the world’s most advanced semiconductors in five years’ time as the race between the South Korean electronics giant and the world’s biggest chipmaker TSMC warms up.

The company outlined a roadmap for its chip production plans and said it would start manufacturing chips with a 2-nanometer process in 2025 and a 1.4-nanometer process in 2027.

The nanometer number refers to the size of each individual transistor on a chip. The smaller the transistor, the more it can fit on a single semiconductor. Generally, downsizing to nanometer size can produce more powerful and efficient chips.

For comparison, the processor of AppleThe latest iPhone 14 Pro and Pro Max models are a 4 nanometer chip.

Samsung started producing 3 nanometer chips earlier this year.

Shares of Samsung in South Korea closed nearly 4% higher on Tuesday.

The South Korean company, known for consumer electronics and memory chips, is looking to ramp up its contract chip manufacturing, or foundry, business in a bid to catch up with Taiwan’s TSMC.

Samsung is the world’s second largest foundry by revenue, with a 17.3% market share compared to 52.9% for TSMC, according to TrendForce.

For its part, TSMC plans to begin production of 3nm chips this year, with 2nm production expected to begin in 2025. However, the company has not officially announced plans to mass-produce 1.4nm chips. n.

“This is the first time that SEC (Samsung Electronics) has guided its long-term foundry roadmap and I think it’s more aggressive than TSMC and market expectations,” analyst SK Kim told CNBC. at Daiwa Capital Markets.

Samsung’s ambitious plans come amid global economic headwinds and signs of slowing demand for semiconductors. Global chip industry sales fell 3.4% in August from July, according to the US-based Semiconductor Industry Association.

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Despite this, Samsung said it plans to more than triple its production capacity for the most advanced chips by 2027 compared to this year, underscoring its optimism about future demand.

These include its factories in the United States. Samsung has a factory in Austin, Texas, and is building a $17 billion factory in Taylor, Texas.

Washington seeks to attract chipmakers like Samsung and TSMC set up factories in the United States in order to be able to reduce reliance on manufacturing hubs in Taiwan and South Korea.

While Samsung has focused on edge chips, the company also said semiconductors for high-performance computing, automotive and 5G will account for more than 50% of its foundry business by 2027. These are generally less advanced chips.

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