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Samsung Secures First 2nm Chip Orders

kyojuro 7/10/2024

Samsung Electronics confirmed on Tuesday that it has secured an order from the Japanese artificial intelligence company, Preferred Networks (PFN), to use a 2-nanometer foundry process and advanced chip packaging services for the construction of AI chips.

Junichiro Makino, PFN's Vice President and Chief Technology Officer for Computing Architecture, also confirmed in a statement that Samsung's chips will be incorporated into PFN's high-performance computing hardware, aiding in the development of large language models and other applications.

 Samsung confirms first 2nm chip order - what does it mean for TSMC's long-standing customer PFN?

This announcement marks Samsung's first officially disclosed 2nm chip foundry order. However, the news had already circulated within the industry in February when a source revealed Samsung's involvement in creating an AI chip for PFN, though Samsung kept the partner's identity confidential at the time.

The partnership is heralded as a significant milestone for both the AI and chip foundry industries. For PFN, access to state-of-the-art 2nm chips fortifies its competitive edge. For Samsung, the contract signifies a crucial victory in its challenge to TSMC's market dominance.

The semiconductor industry is progressing rapidly in the realm of advanced process nodes. As the industry leader, TSMC has been planning for 3nm and 2nm chip production. Samsung's advancements in 2nm chips could potentially alter the competitive landscape of the global chip market.

Kyung Kye-hyun, head of Samsung's Device Solutions Division, indicated last year that Samsung would adopt the Gate-All-Around (GAA) process starting with the 2nm node, which is expected to surpass TSMC in technological innovation within five years. TSMC plans to implement the GAA process a year later than Samsung.

Interestingly, PFN has been a TSMC client since 2016, and its decision to collaborate with Samsung may indicate significant industry shifts, according to an insider. The source suggested that PFN might have been attracted to Samsung's comprehensive chip manufacturing capabilities, spanning design, production, and packaging. This switch to Samsung could also pave the way for Samsung to capture more of TSMC's clientele and form alliances with other key customers.

Samsung intends to employ the 2nm process for mobile applications in 2025, expand to high-performance computing chips in 2026, and extend to automotive chips by 2027. TSMC aims to mass-produce 2nm chips by 2025, which, according to research firm TrendForce, signals a new level of competition between these tech giants.

Industry analysts have speculated that Samsung's earlier adoption of GAA technology might give it an edge in the 2nm competition. Meanwhile, Intel could face delays in its technological roadmap due to issues with its lithography equipment, potentially missing its 2025 targets.

While it's still premature to determine how chip parameters will ultimately evolve, the industry is witnessing a variety of competitive strategies.

Reports suggest that Samsung is preparing to attract customer orders, especially from Qualcomm, by offering discounted pricing on the 2nm process. Qualcomm, a long-term TSMC client, remains non-committal, having commissioned both TSMC and Samsung for the development and pilot production of 2nm chips. Currently, the cooperation between Samsung and PFN highlights the ongoing competition, with TSMC securing orders from Apple and Qualcomm potentially becoming the next battleground for the two giants.

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