Supply chain
Asian Edge: Competition between Korea and Taiwan in semiconductor
Colley Hwang, DIGITIMES, Taipei

Samsung has a far smaller share than TSMC in the wafer foundry sector, but Samsung's technologies built from its experience in memory and Exynos series AP production are as good as any other leading players. At the moment, Samsung's non-memory businesses together contribute only 7% of the company's revenues, but profits from its memory business are 3.2 times those of TSMC. However, in terms of profits from non-memory businesses, TSMC are 6.2 times Samsung's.

As the business opportunities from smart city, smart home and IoV begin to rise, demand for APs is also expected to pick up dramatically. With sales of car-use semiconductor products expected to enjoy a CAGR of 18% for the next few years, Samsung's acquisition of Harman and its partnership with Audi for supplying car-use APs are both expected to bring in strong revenues: a conventional car may require around 200-300 ICs for its systems, but an autonomous driving vehiclemay need as many as 2,000.

TSMC and Samsung have both announced plans to build their 3nm manufacturing capabilities, but market researchers estimate that the fee for designing an IC on 3nm node would be at least US$500 million. For a 28nm planar-type IC, the average design fee is about US$51.3 million, but one using 7nm FinFET process costs nearly US$300 million, almost six times as much because of all the expenses from related intellectual property (IP) and others. Most IC design houses would prefer to stick with foundries such as TSMC and Samsung that have technological advantages, but the high costs involved in making chips at the top-notch foundry houses will remain a problem for IC design houses.

(Note: This is part of a series of articles by Digitimes president Colley Hwang on the latest developments of the IT industry in the wake of the US-China trade war.)

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