Samsung hopes to start construction on a new U.S. fab sometime this year
The South Korean manufacturer has a lofty goal; it wants to surpass TSMC and be the number one contract foundry in the world. These foundries take designs from chip designers like Apple, Qualcomm, MediaTek and others and manufacture these integrated circuits according to the plans they receive. In the lingo of the chip industry, those aforementioned companies are considered to be fabless.
Samsung already purchased some land in Austin next to its current fab which can produce older processors only. According to research from Citibank, it also can’t handle the volume of production that Samsung’s new U.S. facility is likely to churn out for firms like Intel, Qualcomm, and Tesla. Citibank believes that Intel would prefer to turn to Samsung to outsource its chip needs instead of giving its business to TSMC.
To be sure, Samsung’s goal of toppling TSMC at the top of the contract foundry industry is going to be tough. The latter doesn’t mind spending money when it needs to. For example, TSMC is spending as much as $28 billion this year. While Samsung did spend $26 billion last year, most of that spending was for its memory business. Additionally, processors are harder to produce than memory chips.
While Samsung, in this day and age, could rely on a U.S. fab to sign deals with U.S. companies, it is unlikely to pick up Apple’s business. Apple seems to be happy with TSMC and Apple mike be loath to turn over its chip designs to its biggest rival in the smartphone market. Without Apple’s business (it is TSMC’s largest customer), Samsung will have a harder time leapfrogging over the foundry to become number one.