Can Samsung's new generation FinFET process capture Qualcomm?

Samsung Electronics, which has been competing fiercely with TSMC in the field of advanced process foundry technology, could snatch all Qualcomm's orders with its second-generation 14nm FinFET process? Samsung recently announced the commercialization of a mass-produced logic process using its 14nm LPP (Low-Power Plus) technology.
Warren Lau, an analyst at Maybank Kim Eng in Hong Kong, said that Qualcomm contributed nearly 20% of all TSMC orders two years ago, and will transfer most of its 10/14nm orders to Samsung after 2017: "Samsung will be the exclusive supplier of Qualcomm's 14nm chips and modems in the future; the same will be true for the 10nm node."

Samsung said that Qualcomm is using the company's latest 14nm LPP process to produce its Snapdragon 820 processor, and the first batch of products will be used in mobile devices launched in the first half of this year; Samsung also emphasized that the company is a leader in FinFET technology, and its first generation of FinFET process was launched in the first quarter of 2015, when the company used its own 14nm LPE (Low-Power Early) process to produce the Exynos 7 octa-core processor. Samsung will use the new 14nm LPP process to produce the Exynos 8 octa-core processor.

(Qualcomm outsourced its high-end mobile phone chip orders to Samsung, which is actually related to its involvement in antitrust investigations. The Korea Fair Trade Commission preliminarily determined at the end of last year that Qualcomm's patent licensing behavior based on the selling price of mobile phones involved monopoly and was ready to impose fines.

Industry insiders believe that Qualcomm's decision to outsource the production of high-end mobile phone chips to Samsung, while ignoring the issue of Samsung becoming its competitor, is a gesture of goodwill to the South Korean government.

For TSMC, even if it loses Qualcomm's Snapdragon 820 order, it still has Qualcomm's mid- and low-end mobile phone chip orders, and also has mobile phone chip foundry orders from Intel, MediaTek, and Spreadtrum. At the same time, Apple's new generation A10 application processor large order this year has been confirmed to be exclusively obtained by TSMC. From this point of view, TSMC's claim that the market share of 14/16nm wafer foundry will rise to more than 70% this year is actually based on facts.)

Samsung's latest news coincided with TSMC's latest forecast on January 14. TSMC estimates that its market share in the 16/14nm node will increase from 50% in 2015 to 70% in 2016. TSMC also predicts that the market demand for its 16nm products will contribute about 20% of the company's annual performance in 2016.

Samsung and TSMC are both developing lower-cost versions of FinFET processes to maintain market competitiveness. In the fourth quarter of 2015, TSMC completed the development of the 16nm FinFET Compact (FFC) process, which is a lower power and lower cost version of the 16nm FinFET process announced by the company in mid-2015. TSMC expects to start mass production of the 16nm FFC process this quarter.

Charlie Bae, vice president of Samsung's system LSI business and marketing, said that the company will continue to provide derivative versions of its advanced 14nm FinFET process technology to maintain its technological leadership. Samsung said that its latest 14nm LPP process can provide 15% higher speed and 15% lower power consumption than the previous generation LPE process technology through the optimization of transistor structure and technology.

In addition, Samsung also said that by using fully-depleted FinFET transistors, it can provide enhanced manufacturing capabilities to overcome process miniaturization limits. Samsung expects that the 14nm FinFET process can be applied to mobile phones and Internet of Things (IoT) chips, as well as various networking and automotive chips that require high performance and power saving.

Compiled by: Judith Cheng

(Reference: Has Samsung Snagged Qualcomm Business with New Process?, by Alan Patterson)

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