Samsung plans to rival TSMC in foundry, says report

[Idontcare]

Samsung plans to rival TSMC in foundry, says report

South Korea's Samsung Electronics Co. Ltd. plans to double its production of chips for others, so-called foundry production, every year until it rivals market leader Taiwan Semiconductor Manufacturing Co. Ltd., according to a Chosun Ilbo report that referenced an un-named company spokesman as its source.

Chosun Ilbo quoted a Samsung Electronics spokesman on Thursday saying the company has decided to expand its foundry production as a "future growth engine with the long-term goal of becoming as big as the world's number one TSMC."

Samsung entered the foundry business in 2006 with sales of about $75 million. In 2007 it had sales of $385 million according to IC Insights, although this was some way behind other leading IDMs, Texas Instruments ($610 million) and IBM ($570 million).

Samsung has a wafer fab dedicated to foundry business on a 350-acre site in Giheung, South Korea. The company has always stressed that its foundry operation is in contrast to the IDM "fab-filler" approach seen previously. Late in 2008 it was reported that Samsung had poached the 40-nm business of Xilinx from pure-play foundry United Microelectronics Corp.

http://www.eetimes.com/news/semi/showArticle.jhtml;?articleID=222000629

Between GlobalFoundries and Samsung, TSMC has got some deep-pocketed competition headed their way.

Good news for us, not so much for TSMC shareholders.

 

[GodisanAtheist]

Good. If TSMC's recent 40nm flub has demonstrated anything, its the need for clients to spread their manufacturing out a little bit.

 

[faxon]

Good. If TSMC's recent 40nm flub has demonstrated anything, its the need for clients to spread their manufacturing out a little bit.

yea it makes you wonder what TSMC is doing over there when others havent had any issues with similar density process tech thus far. having that many problems at the fab level is a bad thing for everyone, since it prevents the companies designing products for that tech from maximizing the returns on their R&D

 

[Idontcare]

The 45/40/32 debacle may turn out to be more of a bubble in history at TSMC a few years down the road from now, unlike the preceding and well-managed node ramps the current ones were developed under new management as both Morris Chang (TSMC founder) and Shang-Yi Chiang (0.25um thru 65nm node manager) stepped out for 45nm and only recently rejoined the company in their prior capacities this past summer. Probably too late to effect 32nm and maybe even too late for impacting 28nm but certainly soon enough to intersect 22nm.

 

[Wreckage]

Whatever happened to UMC they were making chips for NVIDIA not that long ago.

 

[Idontcare]

Whatever happened to UMC they were making chips for NVIDIA not that long ago.

While UMC claims to have been shipping 40nm since 2008 and stated the majority of their capex is for 40nm capacity ramp they have yet to breakout their 40/45nm revenue separate that reported for 65nm...which is common when the revenue is basically zero.

http://www.umc.com/English/pdf/UMC09Q3_financial_presentation-E.pdf

(see page 12)

 

[Idontcare]

Opinion: Samsung will make it in foundry

Samsung wants to rival $10 billion Taiwan Semiconductor Manufacturing Co. Ltd. at the foundry game? Is Samsung serious? And should others take them seriously?

I say yes and yes.


And the reason is: when Samsung puts its corporate will to something it slowly and surely executes. It may take years but Samsung gets there and its very existence is a testament to South Korea's long-term strategic approach.
As a result Samsung is the world's second largest semiconductor maker. With sales of $20 billion in 2008 it was roughly twice as large as its nearest competitors, who include TSMC among their ranks.

http://www.eetimes.com/news/semi/showArticle.jhtml;?articleID=222001223

Opinion piece over on EETimes discussing the viability of Samsung growing their foundry marketshare.

 

[Fox5]

Not a big deal, didn't a bunch of companies just divest their fabs? This is just bringing the playing field back to where it was.

South Korea has got to be on of the best developed economies in the world though, how many leading corporations are located there? They're technological leaders in a few areas, and not far behind in many others. It seems disproportionate for a country of its size.

 

[Cattykit]

Given it is Samsung, I think it's a huge deal. I value this as an industry changing news.

Samsung is darn good at playing economics of scale, they're good at squashing competitors, and they like playing chicken-run games. Look at what they did in RAM market and how they drove competitors out of business.
Witnessing how Twainese RAM makers suffered and still suffer due to Samsung's game, TSMC must be in panic by now.

 

[shangshang]

Samsung is a well run company. I remember years ago, the label Samsung was associated with cheap korean stuff. Now, they're right up there with Sony in terms of brand recognition

 

[jvroig]

Witnessing how Twainese RAM makers suffered and still suffer due to Samsung's game, TSMC must be in panic by now

I must have not heard of this. What happened, and which Taiwanese RAM makers? (Or links to stories about it, if you aren't in a talkative mood).

 

[Idontcare]

I must have not heard of this. What happened, and which Taiwanese RAM makers? (Or links to stories about it, if you aren't in a talkative mood).

from the link in the OP:

Consider how Japanese chipmakers led the DRAM market in the 1980s. In 1990 Japan was responsible for 70 percent of the world's DRAM production but by 1995 the world's largest DRAM maker was Samsung with $6.4 billion sales and 16 percent market share.

 

[Cattykit]

I must have not heard of this. What happened, and which Taiwanese RAM makers? (Or links to stories about it, if you aren't in a talkative mood).

http://www.google.com/#hl=en&safe=off&q=samsung+dram+chicken+&aq=f&aqi=&oq=&fp=b36c7832dbb01be6

 

[jvroig]

I don't understand what Samsung did there. To the detriment of established DRAM players, they entered the market and priced their wares low to achieve market penetration, dragging with them the entire DRAM market? Is that what happened and is that what is referred to as the "game of chicken"? Help, anyone? IDC?

 

[Idontcare]

Samsung is an interesting company, not just because of their technology prowess but because they operate their business in a way that american (and Japanese) business won't.

While we dicker around with our accounting tables, trying to enhance things like PFO% and gross margins, Ebitda, etc, the guys at Samsung tend to just look at the bottom-line "if we do X will it increase our earnings per share?".

Doing X may not be the most capital efficient thing to do, it might not be the sexy thing to do from a wall-street fad sort of thing, but if they can convince themselves there is a buck to be made in doing X then they will pursue it.

So for example we see the american businesses pursuing outsourcing of everything and anything because that's what makes this quarter's (and maybe next quarter's) numbers look good, and wallstreet rewards the fad by boosting P/E ratios with some silly forward-looking earnings projections. But Samsung will just dive in and push ahead because they simply want profits and they will take it no matter how it is earned.

They are a behemoth, as a company from a total sales standpoint (not just CMOS semiconductor) they dwarf Intel. I read somewhere once that Samsung spends as much on their global advertising campaigns alone for all their products as Intel spends annually on R&D.

So whereas Intel's decision makers are bound to pursuing just the highest of the high-margin products and markets, Samsung has no qualms about going after markets that offer 10% gross margins. If they can make a buck doing it then that is all the justification they need to pursue it.

This used to be the Japanese model by the way, this is how Sony, Toshiba, Mitsubishi got to be these hugely massive conglomerates that had their fingers in every market out there from cars to toothpaste to semiconductors, etc. And it works so long as the purpose of the business is viewed as making products and growing in size and revenue, but once the decision makers decided earnings alone was not good enough but that the manner in which those earnings are created (capital efficiency, debt/equity ratios, gross margins, PFO%, etc) had to be maximized for the sake of appealing to wall-street so the P/E ratio itself could be maximized then they too (Sony, etc) started the demise phase of the business cycle.

Samsung will no doubt get there too some day, but for now they are not and that makes them dangerous to anyone that already has.

(this is also on part what makes China/Taiwan businesses different, and perceived to be a threat, because their decision makers aren't beholden to stipulations and expectations over the quality of the revenue and earnings they generate...just make enough money to pay the bills and the employees and you've got yourself an acceptable business model, profits are extra and they'll take them in any way, shape or form they can get them...in the USA if the profits come in a way that lowers your gross margin or PFO%, etc, then we are picky and we'll get rid of that part of the business so our "numbers" look better as presented to wall street)

 

[IntelUser2000]

I think back in their home turf, they are as diverse as the Japanese companies are.

They do

-finance-related(well, from what I know they have their own credit cards )
-Consumer electronics(TV/Printers/Monitors/Desktop/Laptop computers/Hi-Fi)
-Kitchen appliances(Dishwashers/Ovens/Refrigerators/Microwave)
-Some specialy electronics like heating mats, toilets(those that have wash functions), electronic locks on doors etc.
-They used to make cars, before it went haywire

-Oil/Chemical, though I'm not sure if it works like GF with AMD or is part of the company

Saying its disproportionate to the size of the country is undermining how it really is.

 

[Cattykit]

Samsung, indeed, is a very interesting company. It's a large cooperation that is based on ownership. The owner has much control over the entire branches of the cooperation .Though he resigned a while ago due to political/social curruption (If same thing happened in U.S.A, he'd have been sentenced lifetime and Samsung would've been dismentled.) it's a well known fact that he still manges the firm behind a curtain. Unlike the other CEOs who has to care about feelings of stockholders each seconds, he can make bold moves for he is the king and the company is his kingdom.

At the same time, it should be noted how he is fucked up. I can't really think of a better of saying it. He really is fucked up if you look at him and his company in social/political way. Though all the evidences have been presented, he was all forgiven fearing his losing power over Samsung would lead to fall of the firm which, in turn, might result in ecnomic slide of S. Korea.

 

[Cattykit]

I don't understand what Samsung did there. To the detriment of established DRAM players, they entered the market and priced their wares low to achieve market penetration, dragging with them the entire DRAM market? Is that what happened and is that what is referred to as the "game of chicken"? Help, anyone? IDC?

Yes, that's what happened and we enjoyed it as RAM became dirt cheap. Samsung also took damages in the beginning but other competitors were damanged far worse. It seems that the race ended a while ago when some of the main competitors went bankrupt (Qimonda being the first victim. Taiwanese govt. trying to reconstruct the DRAM industry by merging them together as they were on the verge of following Qimonda's path) and Samsung started adjusting supplies.

BTW, It's been a while Samsung entered the market and they have been a dominant player more than a decade.

 

[Fox5]

Samsung, indeed, is a very interesting company. It's a large cooperation that is based on ownership. The owner has much control over the entire branches of the cooperation .Though he resigned a while ago due to political/social curruption (If same thing happened in U.S.A, he'd have been sentenced lifetime and Samsung would've been dismentled.) it's a well known fact that he still manges the firm behind a curtain. Unlike the other CEOs who has to care about feelings of stockholders each seconds, he can make bold moves for he is the king and the company is his kingdom.

At the same time, it should be noted how he is fucked up. I can't really think of a better of saying it. He really is fucked up if you look at him and his company in social/political way. Though all the evidences have been presented, he was all forgiven fearing his losing power over Samsung would lead to fall of the firm which, in turn, might result in ecnomic slide of S. Korea.

Samsung isn't the only Korean conglomerate like that.
I'm probably getting this wrong, but from some reading I had to do on Asian economies, they're often modeled more after mafia type organizations than we'd be used to in the West.

Japan, until very recently, favored corporate partnerships based off of long established relationships between the companies, or the families that owned them. They may be in entirely different industries, they may be competitors, but they basically formed tight bonds that lasted decades and would support each other almost out of honor.

Taiwan's economy was based directly around familial ownership. Businesses were family businesses, and they only did business with other businesses owned by family members. The senior member of a family, no matter the size of his company, had strong say in the interests of related companies (by family).

South Korea apparently lacked a strong central government until the military took power around the time of the Korean war. Instead, it had many strong syndicates, similar to mafias. (http://en.wikipedia.org/wiki/Chaebol refers to the modern day formations)
When the government game into power after the war, it displayed a type of central planning that I'm surprised didn't get South Korea labeled as a communist nation. Each existing group was assigned an industry that it would control, with very strict planning and goals set by the central government. However, it was not a one-directional relationship, and as the chaebols have grown more powerful over time, they've been able to exert more influence back onto the government. And each chaebol has a sort of corporate territory that the head honcho exerts influence over (say, Samsung and all its businesses) and the other chaebols generally respect the established bounds and don't try to do business in those areas.

 

[Janooo]

The 45/40/32 debacle may turn out to be more of a bubble in history at TSMC a few years down the road from now, unlike the preceding and well-managed node ramps the current ones were developed under new management as both Morris Chang (TSMC founder) and Shang-Yi Chiang (0.25um thru 65nm node manager) stepped out for 45nm and only recently rejoined the company in their prior capacities this past summer. Probably too late to effect 32nm and maybe even too late for impacting 28nm but certainly soon enough to intersect 22nm.

What's going to be the finish line for Si? 10nm?

 

[tcsenter]

Samsung is darn good at playing economics of scale, they're good at squashing competitors, and they like playing chicken-run games. Look at what they did in RAM market and how they drove competitors out of business. Witnessing how Twainese RAM makers suffered and still suffer due to Samsung's game, TSMC must be in panic by now.

Its not the era of unfettered Chaebol influence and government-sanctioned illegal dumping, anymore. For the most part, the Japanese and later the Koreans were able to illegally dump DRAM on the market not only because of government collusion but also because Mostek - the developer and owner of some strategically significant DRAM patents - never bothered to assert their intellectual property rights when it had the chance to, for whatever stupid reason.

 

[Cattykit]

Samsung isn't the only Korean conglomerate like that.
I'm probably getting this wrong, but from some reading I had to do on Asian economies, they're often modeled more after mafia type organizations than we'd be used to in the West.

Japan, until very recently, favored corporate partnerships based off of long established relationships between the companies, or the families that owned them. They may be in entirely different industries, they may be competitors, but they basically formed tight bonds that lasted decades and would support each other almost out of honor.

Taiwan's economy was based directly around familial ownership. Businesses were family businesses, and they only did business with other businesses owned by family members. The senior member of a family, no matter the size of his company, had strong say in the interests of related companies (by family).

South Korea apparently lacked a strong central government until the military took power around the time of the Korean war. Instead, it had many strong syndicates, similar to mafias. (http://en.wikipedia.org/wiki/Chaebol refers to the modern day formations)
When the government game into power after the war, it displayed a type of central planning that I'm surprised didn't get South Korea labeled as a communist nation. Each existing group was assigned an industry that it would control, with very strict planning and goals set by the central government. However, it was not a one-directional relationship, and as the chaebols have grown more powerful over time, they've been able to exert more influence back onto the government. And each chaebol has a sort of corporate territory that the head honcho exerts influence over (say, Samsung and all its businesses) and the other chaebols generally respect the established bounds and don't try to do business in those areas.

While most of what you descrbied are accurate, some aren't. This is not to say you're wrong; in fact, you're quite right but I must say there're spots that I need to point out.

I agree that S. Korean cooperations aren't not the only ones that are tied to families. However, the level of control varies. That's what makes the case of Samsung (as well as other S.Korean cooperations) unique. They really OWN those huge TNCs.

"And each chaebol has a sort of corporate territory that the head honcho exerts influence over (say, Samsung and all its businesses) and the other chaebols generally respect the established bounds and don't try to do business in those areas."

Not really. They do like to jump into the area of others but it's the government that tries such things do not happen as they fear heated competition may not benefit the whole economy of a nation in general.
e.g. Samsung entering electroics market when LG or Hyundai was already in it. Samsung jumping into automobile market when it was heavily opposed by Hyundai, Daewoo and Govt. Though Samsung stronly pushed it, it was soon taken away by the govt. during economics reconstruction triggered by Asian Economic Crisis. Just look at conflicts in between LG, Samsung, Hyundai, and Daewoo, you'll see how they fought against each other by entering others' territorities.

 

[Nemesis 1]

Man IDC you busy little beaver this weak . Thanks much for helping prove that what I said last weel was in fact trueth that this week would be interesting . On another front AMD s shills are being exposed and more yet to come .

 

[tcsenter]

South Korea's Samsung Electronics Co. Ltd. plans to double its production of chips for others, so-called foundry production...

And its called a "merchant" foundry, not foundry production. FYI..

 

[shangshang]

...

Though he resigned a while ago due to political/social curruption (If same thing happened in U.S.A, he'd have been sentenced lifetime and Samsung would've been dismentled.)
....

really? So what about all those revolving relationships between congressmen, lobbyists, and CEO's within the military industrial complex in the US? $10 billions in cash went missing in Iraq (back when W was still around) and nobody could account for. I wonder if that $10 billions was watched by Cheney with both eyes closed while the money slip in Haliburton's pocket? What about all the pork projects and government contracts hand out without much bids?

Within the last 6-8 years, when a lot of accounting scandals hit the big Wall Street accounting firms... plus recently with the financial crisi hitting pretty much every major financial institution... partly due to greed, partly because the Feds were their accomplice... which culminated in an aggregate repression of the US economy... exactly how many CEO's got lifetime? or wait, a lot of them got huge BONUSES for voluntarily stepping down... stepping down from a big mess they created (with their buddies).

Taxpayers to the rescue of course.

When it comes to high money and corporate corruptions (or lobbying as they like to call it in the US), the USA is no better off than Japan, Korea, or even China. Fact is "the same thing" has happened in the USA and will continue to happen.