Samsung plans to rival TSMC in foundry, says report

LONDON — South Korea's Samsung Electronics Co. Ltd. plans to double its production of chips for others, so-called foundry production, every year until it rivals market leader Taiwan Semiconductor Manufacturing Co. Ltd., according to a Chosun Ilbo report that referenced an un-named company spokesman as its source.

Global foundry chip production was worth about $19 billion in 2008 with TSMC alone responsible for about $10 billion, according to iSuppli Corp. (see Foundry rankings change as shortages near).

Samsung is the world's second largest chip producer and the leader in DRAM and NAND flash memory production but has only a few hundred million dollars of sales in the foundry business.

Chosun Ilbo quoted a Samsung Electronics spokesman on Thursday saying the company has decided to expand its foundry production as a "future growth engine with the long-term goal of becoming as big as the world's number one TSMC."

Samsung entered the foundry business in 2006 with sales of about $75 million. In 2007 it had sales of $385 million according to IC Insights, although this was some way behind other leading IDMs, Texas Instruments ($610 million) and IBM ($570 million).

Samsung has a wafer fab dedicated to foundry business on a 350-acre site in Giheung, South Korea. The company has always stressed that its foundry operation is in contrast to the IDM "fab-filler" approach seen previously. Late in 2008 it was reported that Samsung had poached the 40-nm business of Xilinx from pure-play foundry United Microelectronics Corp.

The incentive for Samsung to attack the foundry market can be seen in terms of the annual growth predicted for the memory and foundry markets over the next several years. The memory sector is expected to average just 2.1 percent per year up until 2013, while the foundry market is expected to grow 6 percent per year.

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