Forward-looking: Samsung’s biggest ambition lies in making the chips that will power the next-generation devices from companies like Apple, Google, and Amazon, who dream of blending 5G and AI into new mobile experiences. To that end, the company will spend in excess of $10 billion a year to make those dreams a reality.
Samsung is well aware of the benefits of being able to make your own custom silicon as well as that of other tech giants for their many smart devices. As of late, it’s said to be even picking up some of Intel’s CPU production to help the latter keep up with increased demand for its 14nm parts.
But more importantly, the company is betting big on keeping its chip supremacy, and this isn’t about making faster and higher capacity flash storage. Samsung announced at the Foundry Forum earlier this year that it plans on spending $116 billion over the next decade in an effort to develop the chip production capacity and expertise that will serve the needs of key players in the 5G, automotive, machine learning, blockchain, and high-performance computing markets.
Specifically, the investment will go towards a process called extreme ultraviolet lithography (EUV) that is crucial in the race to 5nm and beyond. Samsung’s vice president of foundry business Yoon Jong Shik noted that “companies like Amazon, Google and Alibaba, which lack experience in silicon design, are seeking to make chips with their own concept ideas in order to boost their services. I think this would bring a significant breakthrough for our non-memory chip business.”
The foundry business is currently estimated at a total of $250 billion, but is dominated by rival TSMC, who owns over 50 percent of it while Samsung sits somewhere around 18 percent. TSMC’s market share can be attributed in no small part to its incredible progress on 5nm as well as making Apple’s A13 SoCs for the latest iPhones.
Samsung isn’t the only one willing to spend over $10 billion a year on EUV equipment. TSMC plans an even more ambitious $14 billion a year towards the same goal. Both companies are on track to deliver the first 5nm chips in the second half of 2020, so Samsung executives have started touring big cities in a bid to score as many big contracts as they can.
To get an idea of the scale of Samsung’s chip ambitions, you only need to look at the size of its $17 billion Hwaseong factory. The company is paying to the tune of $172 million for just one of many EUV machines needed to make its 5nm silicon dreams a reality.
It’s worth noting that Samsung isn’t aiming at competing with TSMC and other foundries for the same chips they’re making today, save for battling Sony on making image sensors with too many megapixels. The Korean giant sees a rare opportunity to shine in areas where its rivals are too busy to make a dent, such as making 5G modems for Qualcomm and smartphone makers such as Vivo, or AI chips for Baidu’s self-driving fleets of cars and buses.