Samsung busts TSMC’s ‘monopoly’
TSMC, the world’s largest chip foundry, is likely to lose pricing power this year in its most profitable technology nodes ranging from 28nm to 16nm as key customers including Qualcomm, MediaTek, Apple, Nvidia and Marvel shift to Samsung and other TSMC competitors as second sources, the analysts said after TSMC posted its first-quarter 2015 financial results on April 16.
“TSMC’s monopoly on leading edge has been broken thanks to Samsung’s successful ramp of 14nm with current yields exceeding 70%,” said Mehdi Hosseini, an analyst with Susquehanna International Group. “Samsung has effectively become as good as TSMC at 14nm while offering a much lower ASP per wafer.”
Moreover, Samsung has gained bargaining power with Qualcomm, MediaTek and Marvel, all of which are negotiating to win sockets in a new lineup of Samsung mobile phones slated for launch in 2016, according to Hosseini. Samsung has more incentive to use its foundry business as a bargaining chip to exchange foundry business for mobile design wins, he said.
Last week, TSMC said it will accelerate its 16nm ramp while reducing 20nm capacity. The company’s faster-than-expected rollout of 16nm and 10nm are signs that TSMC is anxious to regain dominance at the leading edge, according to BNP Paribas analyst Szeho Ng.
“The 10nm R&D pull-in shows TSMC’s desperation to regain the tech lead after its loss of the 14/16-nm monopoly, but we expect 10nm will only generate sales in late 2016,” he said. “We take a cue from TSMC’s recent faster 16nm FinFET expansion with the company bagging more Apple A9 orders, but the A9’s identical package layout even on Samsung’s 14nm FinFET could aid Apple’s order switch and is a risk to TSMC if Samsung is more aggressive in expansion and pricing.”
Besides Apple, TSMC’s other anchor client — Qualcomm — is likely to shift orders to Samsung, starting with the Snapdragon 820, Ng said. With TSMC’s dominance in the advanced foundry space at risk, the company may need to cut its wafer pricing premium, he added.