Samsung Electronics System LSI prepares to break up with in-house foundry business...Join hands with TSMC?
Samsung Electronics System LSI prepares to break up with in-house foundry business...Join hands with TSMC?
  • JY Kim
  • 승인 2019.08.14 16:20
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Ahead of next year's exclusive production contract expiration, to diversify supply chain such as TSMC and UMC

Samsung Electronics' System LSI division is preparing to break away from the foundry division. Considering the expiration of exclusive production contracts between the two divisions next year, Taiwan's TSMC and UMC likely become the alternatives.

It also shows the strange competition between System LSI and foundry for the position of 'the first place in system semiconductor' emphasized by Vice Chairman Lee. As the foundry division recently succeeded in diversifying its customer base, System LSI division also seems urgent.

Samsung System LSI, considering the consignment production from TSMC, UMC

Recently, the Samsung System LSI Division is considering outsourcing semiconductor production to TSMC and UMC. In fact, TSMC was given back-end work on semiconductor design through the design house. It is not yet confirmed to leave production to TSMC.

Semiconductors under review for TSMC contract production are not high-value, high-volume semiconductors such as application processors (APs) and complementary metal oxide (CMOS) image sensors (CIS). It is known to be a few products such as bio processor and power management semiconductor (PMIC).

All the products of Samsung Electronics' System LSI Division have been made by Samsung Electronics' foundry division so far. This is due to a monopoly production contract signed in 2017 when the two divisions separated.

The contract expires in the first half of next year. This is why Samsung Electronics System LSI reviewed other foundry companies at this point. After the semiconductor design, it takes six months or so to start production. So if Samsung LSI leaves production to TSMC now, the products will come out of TSMC's production line by the second half of next year.

An official from the industry said, "The System LSI division has begun to diversify its foundry supply chain in earnest."

Supply chain diversification, which benefits wil Samsung System LSI get from it?

By diversifying the foundry supply chain, Samsung's System LSI division will have access to more process and design asset(IP) libraries.

Semiconductors are made up of a combination of process and design assets(IP). Even if a semiconductor is designed using a specific IP, it cannot be produced unless the process supports the IP. Samsung's foundry business leads the way in advanced processes, but the IP offerings are narrow.

Before the two divisions separated, the products(targets) they wanted to create were the same, making it relatively easy to co-develop and use IP for design and porting into the process. However, after the separation, the target product changed, and IP development also proceeded separately, making it difficult to expect such cooperation.

Existing foundries, including TSMC, UMC and Global Foundry (GF), support a variety of products in multiple processes.

In addition to the CMOS process, TSMC, the No. 1 foundry industry, offers micromechanical electronic system(MEMS) processes, and package options include Chip on Wafer on Substrate(CoWoS), Integrated Fan-out(InFo), and System on Integrated Chip(SoIC). Support variously.

Global Foundry(GF) offers a wide range of analog and power processes, ranging from 55nm to 180nm, and also makes silicon germanium(SiGe)-based power amplifiers(PAs) and high-performance(HP) wireless communications(RF) semiconductors.

All of these processes are not provided by Samsung foundry division.

It is also attractive for the System LSI division to have an advantageous position in price negotiations. So far, unit price negotiations have narrowed because no foundries other than Samsung foundry have been used.

An industry official said, “After Samsung foundry business succeeded in obtaining orders for large customers last year, and then TSMC lowered the price for mainstream processes below 7nm such as 16nm and 10nm at the end of the year. "There's nothing wrong with the System LSI division." He added.


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