South Korean tech giant Samsung Electronics has begun the construction of a new cutting-edge foundry aimed at bolstering its ability to compete with Taiwan-based rival Taiwan Semiconductor Manufacturing Co (TSMC). The new chip production line will be able to produce 5-nanometer wafers, allowing Samsung to increase its market share in the made-to-order chip business.
Samsung is building the new facility in Pyeongtaek, just south of the capital city of Seoul. The facility will be the company's second 5-nanometer facility, with the first one still being constructed in Hwaseong. The first facility is expected to begin production by the second half of this year.
The company will be using the advanced Extreme Ultraviolet Lithography or EUV process to build its new chips. Samsung mentioned in a statement that the products produced by the facility will be used in a wide range of applications, including advanced 5G wireless networks and high-end computing devices.
The technology that will be utilized in the new foundry is the most advanced of its kind. The equipment that will be used will cost the company billions of dollars but the investment should pay off if it means that Samsung can get a larger market share. To date, Samsung and TSMC are the global leaders when it comes to producing a 5-nanometer or smaller manufacturing node.
The company stated that it expects the facility to be fully operational by the second half of 2021. Samsung is currently the leader in a wide range of industries, including the manufacturing of display, memory chips, and smartphones. However, it does lag behind TSMC in terms of contract chip making. Last year, the company had announced that it plans to invest up to $116 billion in order to compete with TSMC and Intel in supplying integrated circuits for companies such as Nvidia and Qualcomm.
The head of Samsung's contract chip-making division, ES Jung, mentioned in a statement that the new foundry should allow the company to break new ground in the sector, while at the same time driving further growth in its overall business. Samsung initially revealed plans to construct the new facility back in April last year. It also stated that it will be hiring thousands of new employees over the next decade to bolster its logic chip business.
Enhancing the competitiveness and profitability of its contract chip-making business comes as the company's other business units experience a slump in profits. Over the last quarters, Samsung's smartphone and consumer electronics business stagnated amid the decrease in demand caused by the economic downturn and the spread of the coronavirus pandemic.