Samsung's foundry business could be in “serious jeopardy” if TSMC and major US chip designers form a joint venture to operate Intel's semiconductor manufacturing facilities, making a decline in Samsung’s market share inevitable, industry experts warned Thursday.
On Wednesday, Reuters reported that TSMC has proposed a joint venture with Nvidia, AMD and Broadcom to manage Intel’s semiconductor factories. According to the report, TSMC would limit its stake to no more than 50 percent. Qualcomm was also involved in the discussions but has reportedly withdrawn.
The chip designers TSMC approached are major players in the semiconductor industry, generating significant foundry orders.
As demand for AI chips continues to grow, Samsung’s foundry business could face challenges if key industry players collaborate to secure orders and distribute them among themselves.
"If this plan materializes, it would be one of Samsung’s worst-case scenarios, especially as its foundry business continues to generate losses," an industry official said on the condition of anonymity.
According to the report, TSMC wants the potential investors in the joint venture to also be customers of Intel’s advanced manufacturing facilities.
Samsung Electronics is the second-largest foundry after TSMC but continues to trail its Taiwanese rival by a wide margin.
According to TrendForce, TSMC’s market share by revenue rose to 67.1 percent in the fourth quarter of 2024, up 2.4 percentage points from the previous quarter. Samsung’s share fell from 9.1 percent to 8.1 percent during the same period.
The total revenue of the world’s top 10 foundry companies reached $38.4 billion in the fourth quarter, marking a 9.9 percent quarter-on-quarter increase.
While TSMC produces about 90 percent of the world's most advanced chips, Samsung has struggled to close the gap, as key tech firms — including Apple and Nvidia — remain TSMC’s exclusive clients. This has left Samsung in a difficult position, unable to expand its foundry business due to a lack of customers.
In the fourth quarter of 2024, Samsung’s foundry division posted an operating loss exceeding 2 trillion won ($1.4 billion).
Meanwhile, China’s Semiconductor Manufacturing International, the third-largest foundry, held a 5.5 percent market share in the fourth quarter. Unlike Samsung, SMIC benefits from strong domestic demand and has the potential to further expand its market share, according to industry experts.
Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University, said that the US prioritizes TSMC in its semiconductor strategy, with Samsung playing a limited role.
“In Trump’s big picture, the US is focused on expanding semiconductor manufacturing through TSMC for non-memory chips while sourcing High Bandwidth Memory from Korean companies,” Lee said.
“The US sees TSMC as the main player for foundry services and has little interest in Samsung. Investment and government incentives will likely favor TSMC.”
According to reports, TSMC’s proposal for the joint venture stems from US President Donald Trump, who wants the Taiwanese chip giant to help Intel regain its dominance as the American chipmaker struggles financially.
However, the success of the joint venture will depend on whether it benefits TSMC, Lee added.
“TSMC, as a profit-driven company, could either move quickly to establish the (joint venture) or deliberately slow down the process, waiting for Trump’s four-year term to end,” Lee said.
While Intel does not currently rank among the top 10 global foundries, the company has strong capabilities in CPU production and could emerge as a major foundry competitor if it secures key technologies from TSMC, Lee noted.
Meanwhile, the construction of Samsung Electronics’ first chip manufacturing plant in Taylor, Texas, was 99.6 percent complete as of the end of last year.
The company had previously postponed the plant’s operational start from late 2024 to 2025, and industry experts warn that further delays are possible if Samsung struggles to secure enough customers.
herim@heraldcorp.com
