Samsung Foundry's struggles with advanced nodes, particularly 3nm, are well documented. They've enabled TSMC to run away with orders from some of the largest companies in the world while Samsung Foundry loses cash and has to shut production lines due to a lack of demand.
While the company has recently taken some major steps to revitalize its lagging foundry business, it appears that the next big threat to Samsung Foundry's business might actually come from the South Korean government.
A proposal has been floated during a recent seminar at the the National Academy of Engineering of Korea (NAEK) for a public-funded rival to TSMC which would aptly be named KSMC or the Korea Semiconductor Manufacturing Company.
KSMC envisioned as a counter to TSMC's dominance
Ahn Ki-hyun of the Semiconductor Industry Association has called on the government to make a long-term investment in this project to the tune of 20 trillion won or almost $14 billion. Experts estimate that this investment could yield economic gains of 300 trillion won or $208 billion by 2045.
The idea is to create a healthier ecosystem of foundries and fabless manufacturers much like Taiwan has done, as Professor Kwon Seok-jun of Sungkyunkwan University pointed out. TSMC is able to focus on cutting-edge nodes while firms like UMC and PSMC focus on mass production of mature 10nm nodes, enabling the country to carve out a significant chunk of the entire global semiconductor manufacturing business.
Some concerns were raised during the seminar regarding the capability of the taxpayer-funded KSMC to effectively compete in the manufacturing of high-quality chips. SK Hynix CEO Kwak No-jung suggested that repurposing some of Samsung's legacy manufacturing facilities could help.
Newly installed head of Samsung's entire foundry business Han Jin-man laid out his strategy to turn things around at Samsung Foundry recently. It involves improving competitiveness in advanced nodes while also working on increasing customers for legacy processes of 10nm.
In the event that Samsung Foundry is unable to do the former, homegrown competition from KSMC could also make it difficult for the company to extract as much value as possible from its legacy processes.
However, given Samsung's importance to South Korea's economy and its contributions to the development of its semiconductor industry, it's hard to believe that Samsung's concerns won't be heard by the government if and when this proposal actually turns into something concrete.
