Google's switch to TSMC for chips came as a shock to Samsung

Google recently switched from Samsung Foundry to TSMC to get its Tensor chips made. This switch reportedly came as a total shock to the South Korean firm, which is now reportedly discussing internally to solve the fundamental problems in its semiconductor chip foundry business.

Samsung Foundry is reportedly in the middle of an internal inspection after Google turned to TSMC. Google seems to have decided to let TSMC make its smartphone chips for four years (until Pixel 14 series). And it is not just the yield and efficiency issues that urged Google to make a switch. Apparently, Google's insecurity from Samsung's mobile division was also a factor. Apple, too, switched from Samsung Foundry to TSMC a decade ago reportedly out of fear of getting its chip secrets being stolen by the South Korean firm's chip design and mobile divisions.

Various discussions are said to be happing inside Samsung, and they include spinning off its foundry division into a separate firm and transferring a part of the company's chip design division (System LSI) to Samsung's smartphone business unit (Samsung MX).

According to a report from The Bell, Samsung's Device Solutions (DS) division that oversees the South Korean firm's entire semiconductor chip units (Memory, Foundry, System LSI) is holding a global strategy meeting headed by Vice Chairman Jeon Young-hyun to strengthen Samsung's chip foundry capabilities.

Samsung Foundry has been struggling for quite some time. First, it lost Qualcomm after overheating issues appeared in the Snapdragon 8 Gen 1 chip. Then, after the launch of power-hungry RTX 3000 series GPUs, it lost Nvidia as a client. Now, even Google turned away from the company. All those clients switched to Taiwanese firm TSMC, which currently has a 67.6% market share. In comparison, Samsung's semiconductor chip production market share dropped from 8.1% to just 7.7%.

Even after investing billions of dollars over the past five years, Samsung's plan to overtake TSMC by 2030 doesn't seem to be materializing. In fact, the company has lost market share to TSMC and the gap between them is widening. Its 3nm process node has been struggling, and the only big client it has managed to acquire for that process is its own System LSI division. Even its 2nm process node is said to be having yield related issues.

Samsung is now working with Synopsys to improve its yield. It is also trying to improve its chips for automobiles and robotics rather than just focusing on AI and mobile device chips. If its first 2nm chip, the Exynos 2600, succeeds and doesn't have any overheating or performance throttling issues, it believes that it can start winning back some of its older clients that are now heavily dependant on TSMC. Those clients include Nvidia and Qualcomm.

Image Credits: Samsung