Samsung to build new local foundry line

Samsung Electronics said Thursday it will build a new semiconductor production line to expand the production capacity of its foundry business to better compete with global foundry leader TSMC of Taiwan.

The tech giant said the new production line will be added at its plant in Pyeongtaek, Gyeonggi Province, 70 kilometers south of Seoul, and will produce 5-nanometer chips utilizing extreme ultraviolet (EUV) semiconductor manufacturing technology, used to produce smaller and more energy efficient chips.

“We have just commenced construction of the new foundry line, which will focus on EUV-based 5-nanometer and below processing technology, and expect it to be in full operation in the second half of 2021,” Samsung said in a statement.

Samsung is in a race to become a leader in the foundry business by 2030, with the company announcing a plan to invest 133 trillion won ($108 billion) in the non-memory sector through that year.

The decision to add the new contract-based chip manufacturing line ties in with President Moon Jae-in’s economic vision to make the country a leading digital powerhouse.

During a special speech, May 10, to mark the third anniversary of his inauguration, Moon said the government will work to create future growth engines by fostering three new industries — system semiconductors, bio-health and future cars.

The foundry business refers to contract-based chip manufacturing for chip design companies that don’t have their own production facilities. The Pyeongtaek facility will be Samsung’s seventh foundry line — the company has five in Korea and one in Austin, Texas.

Though Samsung is the world’s largest memory chip maker, it has been lagging behind in the non-memory chip and foundry businesses that accounts for around 70 percent of the entire semiconductor market.

TSMC is leading the foundry business with a market share of 54.1 percent in the first quarter of this year, according to data from market tracker TrendForce, while Samsung remained in second with a 15.9 percent share.

Samsung has been working to secure more chip production orders from prominent IT firms such as Nvidia and Qualcomm, but its goals seem to remain in the distant future as TSMC has already started mass production of EUV process-based 5-nanometer chips. Samsung is scheduled to start mass production of these at its Hwaseong plant in the second half of the year.

However, Samsung said it will be able to boost its market share starting 2021 when the new contract-based chip manufacturing line in Pyeongtaek will start full operations.

“Following the initial mass production of the EUV-based 7nm chips in early 2019, we recently added a new EUV-dedicated V1 line in Hwaseong, Korea, to our global foundry network,” the company said. “With the new Pyeongtaek facility starting full operation in 2021, our foundry capacity based on EUV is expected to increase significantly.”