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Fraud at Samsung’s chip division under investigation after huge order loss


Last updated: February 23rd, 2022 at 10:40 UTC+02:00

It seems all may not be well at Samsung’s chip division. Samsung has been investing heavily in improving its foundry capabilities. It wants to challenge TSMC to become the leading contract chip manufacturer in the world. The battle hasn’t been easy and TSMC is proving to be a tough competitor.

Samsung needs everything to go as planned if it wants to succeed in its plans. However, in recent weeks, the chip division has suffered setbacks. Recent reports reveal that major contract chip manufacturing orders have been lost due to yield issues. It turns out that there may be more here than meets the eye.

Were the funds allocated for improving yields misused?

According to a report out of South Korea, Samsung has launched an investigation into potential fraud by executives at Samsung Foundry. It’s said that the executives may have fabricated data for 5nm and 4nm chip yields so that the funds allocated by Samsung to improve yields could be misplaced.

The yield is a measure of the efficiency of a chip process. It refers to the number of chips in a wafer that achieve the required quality testing standards. Foundries closely evaluate yields during early production runs on a new process technology before full-scale manufacturing begins.

A report yesterday claimed that Qualcomm had shifted some orders for its 4nm Snapdragon 8 Gen 1 from Samsung to TSMC. Yields for the chipset are reportedly at a dismal 35% – meaning that out of 100 pieces manufactured, only 35 are usable. Yields for Samsung’s own 4nm Exynos 2200 are said to be even lower.

It’s also believed that Qualcomm has decided to not use Samsung Foundry for its 3nm chips. All orders for its next-gen 3nm chips have gone to TSMC. That’s a significant business loss for Samsung Foundry which has long been trying to break TSMC’s stronghold on the market.

Samsung’s investigation aims to ascertain whether current and former executives at the division falsified reports about 5nm and 4nm yields to give the impression that there were no issues. The company would then be able to figure out where the funds allocated for improving yields went.

No further details about the investigation have been revealed as yet. Samsung Electronics told the scribe that such management consulting exercises are performed regularly and that no further details can be shared at this time.

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