Possibility of NVIDIA, Qualcomm, and others outsourcing manufacturing to Samsung due to the soaring cost of TSMC's 2nm process.

Due to the high cost and production capacity limitations in TSMC's 2nm process node manufacturing, major customers like Apple, NVIDIA, Qualcomm are reportedly considering transitioning to Samsung Foundry for the next-generation chip manufacturing. The high manufacturing cost of about 0.03 million dollars per wafer seems to significantly shake up the industry's manufacturing strategy.

The constraint of production capacity has also become a serious issue. TSMC is currently planning to expand its monthly wafer production capacity from 0.01 million pieces to 0.08 million pieces by 2026. However, the industry strongly believes that it will not catch up with the demand. Furthermore, the company has indicated a policy to raise prices of advanced processes by 5-10%, raising concerns about price increases for final products such as smartphones.
To address this situation, TSMC is planning to enhance production capacity at its Arizona plant, aiming to expand the monthly production capacity from the current level to 0.14 million pieces, an increase of 0.02 million pieces. However, it is foreseen that the situation of supply shortage and high costs will continue until this increased production capacity is in place.

In this situation, Samsung Foundry is emerging as a new manufacturing partner. Particularly, NVIDIA and Qualcomm are concerned about losing price negotiation power due to overdependence on TSMC, and have started test production on Samsung's 2nm process. Specifically, Qualcomm is considering outsourcing the manufacturing of future Snapdragon 8 Elite series to Samsung, which could be a significant turning point for both companies.
Samsung has already secured orders from Japan's Preferred Networks (PFN) and is also attracting interest from fabless companies in South Korea. The company's 2nm process development is set to start test production in the first quarter of 2025, following TSMC's lead.

However, there are numerous challenges. Samsung faced technical issues such as overheating and performance degradation when manufacturing Qualcomm's chips on the 4nm process in the past, and has struggled to secure orders from major customers on the 3nm process. Furthermore, in addition to the price decline of DRAM and NAND, as well as the situation where HBM3E high-bandwidth memory has not received NVIDIA's certification, the semiconductor division as a whole is facing a tough situation.

The South Korean media Chosun Ilbo points out the possibility that success in the 2nm process could be the "last chance" for Samsung Foundry business, which is facing losses in the scale of billions of dollars. Industry experts analyze that for Samsung to gain real competitiveness, significant improvements in performance and yield are essential, not just price competitiveness.

TSMC's pricing strategy demonstrates the company's market dominance but also reveals its limitations. While TSMC boasts an overwhelming market share of 64.9%, excessive pricing may potentially benefit competitors in the end.
As pointed out by Kim Hyung-joon, Honorary Professor at Seoul National University, the increasing dependence on TSMC will inevitably drive the diversification of foundries. However, whether Samsung can truly seize this opportunity depends not only on price competitiveness, but also on improving performance and yield. Ironically, TSMC's "success" may ultimately catalyze an active competitive environment.