Based on Samsung Electronics' expansion plan for its logic foundry segment, the Korea-based vendor will stand a chance of beating United Microelectronics Corporation (UMC) and Globalfoundries in terms of production capacity in 2012, trailing only Taiwan Semiconductor Manufacturing Company (TSMC).

Samsung's monthly capacity for its foundry business will reach 526,000 8-inch equivalent wafers around the end of 2012, up by 346,000 units, or 192%, from 180,000 8-inch equivalent wafers in late 2011, according to projections by Digitimes Research. In 2009, Samsung's foundry capacity was as low as 270,000 8-inch equivalent wafers per month.

Specializing in the manufacture of memory chips and LCD panels, Samsung's component operations are undergoing a focus shift to advanced process design fabrication targeting mobile communications applications. The move will help it boost gross margin.

To bring new foundry capacity online in an efficient way, Samsung plans to covert its Line 8 and Line 9 - two 8-inch fabs - from memory to logic ICs. Meanwhile, its Line 14 - a 12-inch fab for memory production - will also be converted to fabricate logic chips on advanced technology processes. Lines 14, 9 and 8 will be renamed to S1A, S1B and S1C, respectively. Fresh ramp-ups at the fabs are slated to kick off during the second half of 2012.

Meanwhile, Samsung's wafer fabrication plant in Austin, US will also bring in additional capacity in 2012. The 12-inch facility has been named "S2" with capacity reaching more than 30,000 wafers a month.

Samsung has budgeted a capex of US$7 billion for its foundry segment in 2012. The number is about 21% of the company capex for the year. In 2011, its foundry capex is estimated at only US$3.8 billion, Chai added.

Foundry leader TSMC previously said its capex would reach a record US$7.3 billion in 2011. It has not provided a capex outlook for 2012.

Instead of grabbing orders from fabless IC firms or IDMs, Samsung's foundry business is expected to follow the kind of model on which collaboration with Apple is based. More PC and consumer electronics brands tend to place orders for customized solutions directly with foundry service providers for cost reasons, and Samsung is looking to ride this wave.

Photo: Michael Lee, Digitimes, December 2011