Following Apple, TSMC has added MediaTek to its roster of 2nm process customers, further widening its lead over Samsung Electronics' foundry division. 

Analysts note that by successively attracting major fabless companies to adopt its 2nm process, TSMC has further solidified its dominant position in advanced process technology and production capacity.

According to Chinese-language media reports on the 17th, MediaTek recently unveiled its new "Dimensity 9600 Pro" mobile system-on-chip (SoC). This marks MediaTek's first product manufactured using TSMC’s 2nm N2P process, integrating over 33 billion transistors. The 2nm designation refers to the linewidth of semiconductor circuits; a smaller value allows for a higher density of circuits within the same area—thereby boosting performance and energy efficiency—making it a cutting-edge process. MediaTek also announced an entry-level variant, the "Dimensity 9600M," based on the 3nm process.

Compared to its 3nm predecessor, the Dimensity 9600 Pro delivers a 14% performance boost and a 23% reduction in power consumption. Its CPU utilizes a fourth-generation "all-big-core" architecture—comprising exclusively high-performance cores—resulting in a 17% increase in single-core performance and a 15% increase in multi-core performance. Power consumption for the ultra-large core has dropped by 37%, while multi-core power consumption has decreased by 61%. By integrating the scheduling of the Neural Processing Unit (NPU), CPU, and memory resources, the chip is designed to support the continuous operation of Large Language Models (LLMs) on smartphones.

Industry insiders note that, following Apple, TSMC has secured 2nm process orders from major fabless clients like MediaTek. They view this as an indication that TSMC’s 2nm production capacity has reached a level where it can be stably allocated to multiple clients rather than being concentrated on a single one. Although other foundries—including Samsung Electronics—are working to improve 2nm yields and attract major clients, TSMC maintains a lead in terms of production capacity and client diversification.

Qualcomm is a key factor in this landscape. Reports indicate that Qualcomm plans to mass-produce its latest application processor (AP), the "Snapdragon 8 Elite Gen 6," using 2nm and 3nm processes in the fourth quarter. Samsung Electronics is striving to win Qualcomm's 2nm orders by offering a one-stop solution. Against this backdrop, analysts believe that if MediaTek's Dimensity 9600 Pro successfully captures market share through strong performance and yields, TSMC could gain a competitive edge in the race to secure Qualcomm's 2nm orders. Proven mass-production experience at a given process node translates directly into bargaining power with subsequent customers.

An industry insider in the domestic wafer foundry sector noted, "TSMC's ability to reliably supply the 2nm process to fabless clients other than Apple signifies that significant, simultaneous progress has been made in capacity expansion and yield stabilization." He added, "Even if latecomers manage to enter negotiations, it will be difficult for them to close the gap with TSMC regarding actual mass-production volume allocations."

Samsung and Qualcomm resume negotiations on 2nm process technology

Samsung Electronics' foundry business has further deepened its collaboration with Qualcomm in the 2-nanometer (nm) semiconductor foundry sector. The relationship between the two companies had previously cooled following controversies surrounding overheating issues with the Snapdragon 8 Gen 1 chip in 2021. However, with the recent improvement in Samsung's 2nm process yields, the question of whether it will secure foundry orders is expected to become clearer at the Qualcomm Snapdragon Summit, scheduled for the 22nd (local time) in Hawaii.

Industry insiders revealed on the 13th that Samsung and Qualcomm are currently negotiating specifications, pricing, and process optimization; rumors suggest a potential split order between Samsung and TSMC. However, the exact volume of orders Samsung might ultimately secure remains uncertain. Both internal and external observers believe that yield rates and pricing will be the decisive factors in optimizing Qualcomm’s custom designs, noting that a performance gap reportedly still exists between Samsung and TSMC in actual testing.

Relations between Qualcomm and Samsung soured rapidly after the Snapdragon 8 Gen 1 chip—launched in late 2021 and featured in the Samsung Galaxy S22 the following year—faced heavy criticism for overheating. Manufactured entirely using a 4nm process, the chip sparked widespread controversy regarding its thermal management and energy efficiency. Consequently, Qualcomm shifted production for all subsequent chips—from the Snapdragon 8+ Gen 1 to the latest Snapdragon 8 Elite (Gen 5)—to TSMC. During this period, Samsung’s foundry business struggled to shake off the reputation for "unstable yields."

This dynamic is shifting as Samsung Electronics achieves significant improvements in its 2nm process yields. Industry sources estimate that yields for Samsung’s 2nm processes (SF2, SF2P) hovered around 20% in the second half of last year but have since risen to the 50%–60% range. Since Jeon Young-hyun took over as head of the Device Solutions (DS) division, the foundry business has undergone continuous restructuring, and the company expressed confidence in expanding its 2nm order volume during earnings calls for both the first and second quarters of this year. Regarding the schedule, one uncertainty involves Qualcomm's plan to launch its next-generation flagship application processors (APs)—the Snapdragon 8 Elite Gen 6 and a higher-end Pro (or Extreme) Gen 6—in two tiers at the summit on the 22nd. Industry insiders had previously suggested that Qualcomm was considering a dual-sourcing strategy involving both TSMC and Samsung Electronics, driven by improvements in Samsung's 2nm process yields and the high cost of TSMC's 2nm wafers. However, since last month, overseas media reports have increasingly indicated that both processors will utilize TSMC's process, effectively ruling out Samsung's foundries. According to TrendForce data from April, TSMC's 2nm process yield stood between 60% and 70%, whereas Samsung's was approximately 55%, highlighting a gap between the two.

From the perspective of Samsung's foundry business, the primary hurdle is the yield gap compared to TSMC. Qualcomm reportedly requires a yield benchmark of around 70% for mass production, while Samsung's 2nm process yield is generally estimated to be in the 50% to 60% range. TSMC has already achieved yields of around 70% for its N2 process and has set a target of reaching 80% yield for mass production of its improved N2P process within the year. Market research firm TechInsights noted in a recent report: "Samsung Electronics achieved a milestone by being the first to mass-produce chips using the 2nm Gate-All-Around (GAA) process; however, it still needs to work on design optimization to narrow the gap with Qualcomm."

On the other hand, Samsung Electronics holds an advantage in terms of production capacity (CAPA). While TSMC aims to achieve a monthly capacity of 60,000 2nm wafers by the fourth quarter of this year, Apple has reportedly already secured more than half of the initial allocation for the iPhone 18 and M6 chips. With TSMC's 3nm (N3) wafer capacity effectively fully booked through 2027 for clients like Nvidia and AMD, there are growing concerns that Qualcomm might struggle to secure sufficient capacity from TSMC when needed. A semiconductor industry official stated, "The symbolic significance of winning back Qualcomm's flagship products is far greater than the volume allocation itself." He added, "However, if the issues regarding overheating and yields from five years ago were to recur, the relationship could cool once again; therefore, demonstrating the stability of 2nm mass production is crucial."

TSMC widens its lead

Although the global foundry market reached a record high in the second quarter—driven by demand for artificial intelligence (AI) semiconductors—the market share gap between TSMC and Samsung Electronics has widened further. TSMC has solidified its dominance in advanced process technologies, particularly the 3nm and 5nm nodes, while Samsung Electronics is striving to rebound in the second half of the year through strategies such as ramping up 4nm production, raising prices, and improving yields for its 2nm process.

Industry sources revealed on September 16 that TSMC’s consolidated revenue for August hit a record monthly high of NT$514.81 billion (approximately US$16.3 billion), marking a 53.3% year-on-year increase and a 10.1% month-on-month rise. This growth was primarily fueled by surging demand for AI accelerators and custom chips designed by major tech companies, which drove an increase in orders for advanced process technologies.

Driven by AI demand, the global foundry market has also experienced rapid growth. Data from market research firm TrendForce indicates that the combined revenue of the world's top ten foundries reached a record US$53.49 billion in the second quarter, an 11.5% increase from the previous quarter.

However, this growth trend highlights a concentration of market share favoring TSMC. TSMC's market share rose from 72.3% in the first quarter to 72.5% in the second quarter—an increase of 0.2 percentage points—cementing its top position. While Samsung Foundry retained second place, its market share fell by 0.6 percentage points during the same period, dropping from 6.5% to 5.9%. Consequently, the gap between the market's top two players—TSMC and Samsung Electronics—widened by 0.8 percentage points compared to the previous quarter.

TSMC is continuously expanding its revenue streams from advanced process technologies. In the second quarter, the 3nm and 5nm processes accounted for 30% and 33% of TSMC’s wafer revenue, respectively, totaling 63%. The 2nm process, which entered mass production in the fourth quarter of last year, contributed 3% of wafer revenue in the second quarter, marking the beginning of meaningful revenue generation. With TSMC planning to rapidly expand 2nm production capacity in the second half of the year, its revenue structure—centered on advanced process technologies—is expected to strengthen further. Samsung Electronics is currently working to revitalize its foundry business, with a focus on its 4nm process technology. According to data from TrendForce, Samsung’s foundry revenue for the second quarter of this year stood at approximately $3.26 billion, a 1.8% increase from the previous quarter. Driven by rising demand for semiconductor products and HBM substrates from external clients such as Qualcomm, the company's 4nm production line in Pyeongtaek is reportedly operating at near-full capacity.

This recovery in demand has also led to higher selling prices. Industry insiders reveal that Samsung raised prices for new orders utilizing the 4nm process (SF4) in July. Price increases reportedly ranged from 10% to 15% for U.S. and Chinese clients, and from 5% to 10% for Taiwanese clients. Additionally, prices for 5nm wafers rose by 10% to 15%, while 8nm wafer prices increased by approximately 10%.

The key to a medium-to-long-term turnaround for Samsung’s foundry business lies in its 2nm GAA (Gate-All-Around) process technology. Samsung expects the volume of orders for its 2nm process to more than double this year compared to last year. With product design work already underway for major AI and high-performance computing (HPC) clients, the company plans to ramp up mass production of new mobile products using its second-generation 2nm process in the second half of the year. Stabilizing yields for the 2nm process and converting new orders into actual mass-production revenue will be crucial for narrowing the market share gap with TSMC.

Kim Dong-won, head of the research center at KB Securities, stated, "Samsung Electronics has stabilized the yield of its 4nm process at over 80%, and the yield for its 2nm GAA process is also rapidly improving to exceed 70%." He added, "With the 4nm process—designed for low power consumption—entering full-scale production in the third quarter, the potential for increased profitability is expected to grow."

Source: Compiled from Chosun

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