“Last year, Samsung Electronics spent about 40 trillion won ($33.5 billion) on memory, foundry and infrastructure investments. This year, TSMC plans to spend more than 50 trillion won only for foundry business,” said Lee Seung-woo, analyst at Eugene Investment Securities.

“As the foundry business requires huge investment, under the current business structure, it would be difficult for Samsung to catch up with TSMC.”

Samsung’s pursuit of TSMC faces greater uncertainties as 2022 is likely to become the first year the South Korean tech giant is overtaken by the dominant Taiwanese foundry in terms of chip investment.

This year, TSMC plans to invest up to 52.2 trillion won on chips, while Samsung is expected to spend 45 trillion won. His plan goes beyond Samsung’s recent chip investments, which amounted to 32.9 trillion won in 2020 and 40 trillion won in 2021, which far exceeded 18.4 trillion won and 35 TSMC’s .6 trillion won over the same period.

Behind TSMC’s massive chip investment is a staggering performance in 2021. Last year, TSMC’s revenue jumped 24.9% to $56.8 billion from a year earlier, while its operating profit soared 40.9% to $23.2 billion, nearly 90% of Samsung’s operating profit in a $25.6 billion chip business.

As TSMC doubles down on its chip investments, its gap with Samsung is only set to widen. According to TrendForce, TSMC held 53.1% of the global foundry market in the third quarter of last year, followed by 17.1% by Samsung.

Knowing that it can’t beat TSMC in terms of scale, Samsung is doing everything possible to take the lead in technology. Samsung aims to mass-produce 3-nanometer chips in the first half of this year, which would be at least a month ahead of TSMC’s planned mass production schedule for the second half of this year.

To further catch up with its rival, Samsung aims to produce the 3nm chips with a breakthrough technology called gate-all-around, or GAA, which would allow up to 35% less area and 30% or 50% higher performance. . lower power consumption than 5nm chips. TSMC is expected to apply GAA technologies starting with 2nm chips, which are expected to go into mass production in 2024.

Nanometers refer to the distance between two transistors on a chip, 1 nanometer being one billionth of a meter. The smaller the distance, the more transistors inside and the faster the chip becomes. The shorter the distance, the less energy it takes to reach all the billions of transistors contained in a chip.

The most advanced chips on the market are 5nm chips, which are demanded by advanced computing companies such as Apple and Nvidia. They are also bestsellers in the cryptocurrency industry, where high-computing, low-power chips are critical to profitability.

By Kim Byung-wook (kbw@heraldcorp.com)