Samsung plans to triple production for its most advanced chips by 2027

Samsung said it will start making chips with a 2-nanometer process in 2025 and a 1.4-nanometer process in 2027. These will be some of the most advanced semiconductors in the world. Samsung is in a race to catch up with market leader TSMC.

SeongJoon Cho | Bloomberg | Getty Images

Samsung said on Tuesday it plans to make some of the world’s most advanced semiconductors within five years, as the race between the South Korean electronics giant and the world’s biggest chipmaker TSMC heats up.

The company unveiled a roadmap for its chip production plans and said it will start making chips with a 2-nanometer process in 2025 and a 1.4-nanometer process in 2027.

The number of nanometers refers to the size of each individual transistor on a chip. The smaller the transistor, the more of them can be packed into a single semiconductor. Typically, a reduction in nanometer size can yield more powerful and efficient chips.

For comparison, the processor in Apple’s latest iPhone 14 Pro and Pro Max models is a 4-nanometer chip.

Samsung started producing 3-nanometer chips earlier this year.

South Korea’s Samsung shares closed nearly 4% higher on Tuesday.

The South Korean company, known for consumer electronics and memory chips, is looking to boost its conventional chip-making, or foundry, business in a bid to catch up with Taiwan’s TSMC.

Samsung is the world’s second largest foundry by revenue, with a 17.3 percent market share compared to 52.9 percent for TSMC, according to TrendForce.

For its part, TSMC expects to start production of 3nm chips this year with 2nm production starting in 2025. However, the company has not announced any official plans to mass produce 1.4nm chips.

“This is the first time the SEC (Samsung Electronics) has guided its long-term foundry roadmap, and I think it’s more aggressive than TSMC and the market’s expectations,” Daiwa Capital Markets analyst SK Kim told CNBC.

Samsung’s ambitious plans come amid global economic headwinds and signs of slowing semiconductor demand. Global chip industry sales fell 3.4% in August compared with July, according to the US-based Semiconductor Industry Association.

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Still, Samsung said it plans to expand its production capacity for the most advanced chips by more than three times by 2027 compared to this year, underscoring its upward trend in future demand.

These include its factories in the U.S. Samsung has a factory in Austin, Texas, and is currently building a $17 billion facility in Taylor in the same state.

Washington has been trying to lure chipmakers such as Samsung and TSMC to set up factories in the US so it can reduce its reliance on manufacturing hubs in Taiwan and South Korea.

While Samsung has placed a strong emphasis on cutting-edge chips, the company also said semiconductors for high-performance computing, automotive and 5G uses will make up more than 50% of its foundries by 2027. These are typically less advanced chips.

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