Qualcomm Ends Foundry Partnership with Samsung and Entrusts 7nm Process to TSMC

Qualcomm Ends Foundry Partnership with Samsung and Entrusts 7nm Process to TSMC

Reports originating from Korea state that Qualcomm has found a new partner in TSMC for its future SoCs built on the 7nm process. This newfound partnership also signals the end of Qualcomm’s consignment production (foundry) partnership with Samsung Electronics.

The Qualcomm Snapdragon 835 was built using Samsung’s process technology and fabrication plants, and was the first SoC from Qualcomm based on Samsung’s 10nm FinFET process. However, this jump to 10nm came with its own set of production problems, with companies struggling with low yields. This in turn pushed back several smartphone release schedules and even forced companies to make do with older SoCs if they wished to keep on track for release.

The report from ETNews mentions that Qualcomm has confirmed that it has been designing and developing its next generation 7nm Snapdragon Application Processor by using chip development tools distributed by TSMC since the second half of 2016. Qualcomm plans to mass produce 7nm Snapdragon SoCs between the end of this year and early next year after the first test wafer is manufactured from TSMC in September this year.

Qualcomm’s jump over to TSMC is not the only recent blow to Samsung Electronics. Last year, Apple had also ended its business with Samsung Electronics and jumped ship to TSMC to produce its AP. TSMC was entrusted with the production of the entire batch of 16nm Apple A10 APs for use in the iPhone 7 and 7 Plus. TSMC is also on track to produce the 10nm Apple A11 AP (tentatively named) for the new iPhone that is scheduled to come out in the coming months.

Samsung Electronics’s recent loss of its two major customers to TSMC is because of the delay in the development of 7nm AP on its end. TSMC chose to develop on the 7nm process while skipping over 10nm entirely, while Samsung Electronics chose to focus on 10nm process as the company believes the 10nm process will be longer lasting in the product cycle, as ETNews reports.

Meanwhile, Samsung also added in an 8nm process technology as a stop-gap solution, acting as an incremental upgrade over the 10nm process. The next generation Exynos AP which will be mass-produced early next year will be produced through this 8nm process technology. Mass production of chips built on the 7nm process technology will only be possible in the second half of next year as the first experimental version of the 7nm process is expected to be out only in July this year. In contrast, TSMC supplied its 7nm process kit to its customers during the second half of last year.

There is no expectation that this move will signal a marked change in the current year’s performance for Samsung Electronics as the company has already secured most of its orders for this year. But, the loss of two of its biggest customers to TSMC means that it is very likely that the operation rate of its factories will drop sharply from next year onwards if Samsung is unable to secure new contracts. Samsung’s foundry business last year was estimated to be worth around $4.44 Billion in sales, with $1.78 Billion (40%) of these sales originating from production of Qualcomm’s APs and modem chips. So when the foundry business loses out on this 40% next year, Samsung Electronics and its foundry business is likely to feel the pinch in 2018.


Source: ETNews

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