Growing Demand for 3-Nanometer Process Demonstrates Confidence
Samsung Electronics and TSMC Focus on Advancing 3-Nanometer Technology
Taiwanese foundry (semiconductor outsourcing) company TSMC recently announced that its revenue for the fourth quarter of last year reached $62.53 billion, maintaining a level similar to the same period the previous year. The net profit decreased by 19.3% to $23.87 billion during the same period.
The notable aspect of the modest financial report was the prominence of the 3-nanometer (nm) process. The 3nm process, which was negligible until the previous year, increased to 15% of the total, altering the landscape dominated by the 7nm (17%) and 5nm (35%) processes. As the semiconductor industry shows signs of recovery this year, the era of 3nm technology is approaching.
This trend is also reflected in the remarks of C.C. Wei, the CEO of TSMC. During the financial results announcement, he stated, "This year, driven by continuous and robust growth in the industry-leading 3nm technology, strong demand for 5nm technology, and AI-related demand, we expect to show steady growth."
Recovery of the Foundry Industry Through 3nm Growth
TSMC expresses confidence in its performance recovery this year. CEO Wei predicts that the overall semiconductor market, excluding memory chips, will grow by 10% this year, with the foundry market expected to grow by 20%. In line with the anticipated growth in the foundry market, TSMC is also forecasting a more than 20% increase in its revenue for the coming year.
The outlook for other markets is also positive. Market research firm IDC expects the foundry market to grow by 18.2% to $124.5 billion this year, and by 19.7% in 2025, indicating a substantial upcycle. The International Semiconductor Equipment and Materials Association (SEMI) also predicts an increase of 9.68% in foundry production capacity in the field this year, reaching 10.2 million wafers per month, compared to 9.3 million wafers per month last year.
Competing at 3nm: Samsung Electronics and TSMC
The semiconductor industry is closely watching the intensifying competition between TSMC and Samsung Electronics as TSMC expands its 3nm process this year. TSMC is manufacturing the latest mobile application processor (AP) for its customer, Apple, using the 3nm process, increasing the proportion of related revenue. Samsung Electronics, on the other hand, secured customers for server chips after entering mass production of 3nm chips in June 2022. Both companies are striving to upgrade their 3nm process technology (from 1st generation to 2nd generation) while improving yield rates (the proportion of defect-free products) in the fiercely competitive environment.
Research firm Omdia forecasts that the 3nm and below foundry market will grow from $21.62 billion in 2022 to $38.18 billion in 2026. Furthermore, it anticipates an average annual growth rate of 65.3% from 2023 to 2026 for the 3nm and below foundry market. The share of the 3nm and below process in the overall foundry revenue is also expected to increase to 24.4% by 2026. Both Samsung Electronics and TSMC are vigorously preparing for the era of 3nm technology.
As of now, TSMC, the leading company in the foundry industry, is evaluated as having a competitive advantage in the 3nm competition compared to Samsung Electronics. However, Samsung Electronics is enhancing its position by advancing its Gate-All-Around (GAA) transistor structure, a next-generation transistor structure, to close the gap with TSMC. GAA, with four sides contacting the transistor gate (the door through which the current flows) and channel (the path through which the current flows), is considered a challenger in the foundry game due to its faster data processing speed and higher power efficiency compared to the conventional FinFET structure.
Samsung Electronics and TSMC Prepare for the 2nm Era
Samsung Electronics introduced GAA technology alongside the mass production of 3nm in June 2022, while TSMC is still in the process of mass-producing 3nm based on the FinFET architecture. TSMC plans to apply GAA technology when it starts mass production of 2nm in 2025. Samsung Electronics aims to narrow the gap with TSMC as the 2nm era becomes mainstream, leveraging its early adoption of GAA in the 3nm era.
Similar views are shared in the market. Kim Dong-won, a researcher at KB Securities, commented, "Currently, Samsung's foundry technology is 1-2