Samsung Foundry, the Korean behemoth’s contract chip manufacturing unit, is struggling with poor yield rates, a report last month revealed. The company’s yield for the Snapdragon 8 Gen 1 was reportedly just 35 percent. Meaning, only 35 chips out of 100 manufactured meet the required quality standards. TSMC, on the other hand, has a production yield of 70 percent for the same chipset. Due to such poor yields of Samsung Foundry, Qualcomm is said to have moved to TSMC for manufacturing its next-gen chips. Thankfully for Samsung, things are improving, at least that’s what the company says.
At its 53rd annual shareholders’ meeting earlier this month, Samsung Devices Solutions CEO Kyehyun Kyung assured that the company is improving the yield rates of its advanced process nodes. It is slow but steady progress, but the Korean firm is getting there, the Samsung co-CEO said. However, he didn’t share any numbers to back his claim. So it’s unclear how much of an improvement Samsung Foundry has made. And more importantly, is the progress promising enough to regain the trust of big clients such as Qualcomm?
When the report of poor yields came out, Samsung suggested some foul play by top-level executives. It reportedly launched an internal investigation to determine if the yield data was fabricated to misplace funds allocated for improvements. While we don’t know whether there has been any foul play, it’s pretty much certain that Samsung Foundry is not yet ready to compete against TSMC in the contract manufacturing space.
Samsung still has a lot of work to do in the foundry business
For years, Samsung has failed to close the gap to TSMC in the foundry business. The Korean firm has been playing second fiddle to the Taiwanese giant in the contract manufacturing space despite it being the world’s biggest memory chip maker. Perhaps the company’s widely known technological shortcomings — evidenced by the flagship Exynos processors of the yesteryears — have limited its growth. While it seems to have finally got the better of some of those shortcomings, Samsung Foundry still has a lot of work to do.
Qualcomm having its next-gen chips manufactured by TSMC instead of Samsung is a massive business loss for the Korean company. Hopefully, it’ll be able to turn it all around quickly before it gets too late. Otherwise, TSMC may run away with all major manufacturing contracts. Time will tell whether Samsung has what it takes to level the battlefield.