In the medium to long term, the most likely candidate that could beat TSMC is not Samsung Electronics, but Intel. South Korea, like Taiwan, sees its advantage in hardware manufacturing and cost efficiency. Even its branding business success means more on the hardware side; it is neither one that sets the rules of the game nor a game changer.
Samsung Electronics is trying to direct the mainstream of the handset market towards foldable phones, hoping to increase the unit price of sales, and to drive its own production of OLED panels. Samsung is expected to sell more than six million foldable phones in the third quarter of 2022, and will sell panels to other handset manufacturers - this is Samsung's usual strategy.
Memory is Samsung Electronics' main source of profit, so of course, Samsung needs to explore its future strategy in the context of memory. Basically, non-memory and DRAM focus on improving line width, while NAND aims at technological breakthroughs in terms of layers. But obviously all major players face bottlenecks trying to enter new generations of technology.
Japan and the EU are actively seeking cooperation with Taiwan, and the US has even proposed the Chip 4 semiconductor industry alliance trying to secure its strategic partners in the Asia-Pacific region. But South Korea has its concerns about such an alliance.
In the second quarter of 2020, Samsung Electronics landed Qualcomm's Snapdragon 888 orders with its 5nm EUV process, the first major case where the Korean tech giant did not have to share with TSMC for its business opportunities. It is said that Qualcomm's X65/X62 baseband chips will be manufactured with Samsung's 4nm technology, with production scheduled for 2022, and Samsung's second-generation 4nm technology will be launched in 2022.
In 2020, Samsung Electronics had a monthly capacity of 260,000 wafers for its 8-inch and 12-inch fabrication each, which increased to 265,000 and 325,000 respectively in 2021. It is estimated that its 12-inch fab capacity will increase to 443,000 wafers in 2022, with 5/7nm capacity increasing to 60,000 (compared to 30,000 as of the end of 2020). Samsung has committed to steady investment in the foundry business until 2026, but the biggest challenge for Samsung's foundry business is the fact that the captive market's contribution is very high.
Gartner has raised the CAGR of the foundry market from 2021 to 2025 to over 16%, and TSMC's aggressive deployment is expected to boost its global market share from 57% in 2021 to 64% in 2025. The Gartner-defined foundry market is smaller than what we perceive. If we take the 2021 foundry market at US$109.9 billion, TSMC's market share is 52%. But whether it is 52% or 57%, we agree that the foundry market is still growing and TSMC will still be the winner.
To understand Samsung Electronics, it is important to look at its business structure. Samsung's revenue is forecast to reach US$240 billion in 2022, of which nearly 40% will come from its mobile communications division - formed by mainly handsets - and about 30% from semiconductors, with memory being the bulk of the semiconductor revenue.
Acer chairman Jason has recently sounded an alarm based on Intel's financial results. Chen was once corporate vice president of sales and marketing at Intel, and later served as senior vice president of worldwide sales and marketing at TSMC. So Chen's warning should be taken seriously.
Intel has been keen on pursuing the most advanced technology, but has not been as quick to make decisions as TSMC when it comes to responding flexibly to market needs. Intel could sell processed wafers at very high prices, but TSMC must use competitive pricing to attract widespread adoption by customers. And there's also consideration about yield rates.
Some time ago, Shang-Yi Chiang, a veteran in the semiconductor industry, accepted an invitation from the California-based Computer History Museum to tell the sotry about his services at Taiwan's TSMC and China's SMIC, and the transcripts of his interview were recently released. Many people who have made comments in the media on his revelations have probably never had a conversation with Chang, shared a meal with him, or attended a TSMC technical forum or other professional events.
Since I started my career in the mid-1980s, I have traveled around the world and enjoyed the world, which wouldn't be easy if I was in another industry. When I was young, I set a goal to travel to 300 cities around the world, and now I have traveled to more than 100 cities in China, 100 cities in Asia outside of China, and more than 100 cities in Europe and America.
Is the economy going downhill? How will Taiwan respond? These were questions my co-host of a program on IC Broadcasting asked during a recent episode. She noted that countries had lowered their economic growth forecasts, and that China's economic growth was slowing down and inflation was severe. I replied that the decentralized production system is taking shape, local value is rising, and this is the best time to increase investment and improve the domestic application environment.
Some individual persons or groups may be well-known internationally, such as film director Ang Lee and the Cloud Gate Dance Theatre. But it is the semiconductor industry, which has been working hard for more than 40 years, that gives Taiwan world-class influence.
