In a significant shift in the semiconductor industry, Qualcomm, previously a top five revenue source for Samsung, has transitioned the majority of its chip production orders to TSMC (Taiwan Semiconductor Manufacturing Company). This move has led to Qualcomm dropping out of Samsung’s list of top revenue contributors for the first time since 2021.
Samsung’s quarterly report, which was made public on May 16, highlighted Apple, Deutsche Telekom, Hong Kong Techtronics, Supreme Electronics, and Verizon as the tech giant’s leading sources of income, collectively accounting for 13 percent of the total revenue. Notably absent from this list was Qualcomm, a key partner in previous years.
The decision by the San Diego-based chipmaker to largely rely on TSMC can be attributed to the Taiwanese company’s strides in advanced semiconductor manufacturing processes and their proven dependability in achieving high yield rates. Samsung, despite multiple chances to maintain its position with Qualcomm, seems to have stumbled, with TSMC gaining the competitive advantage.
Prior reports had indicated Qualcomm’s intention to hand over all Snapdragon 8 Gen 4 chip production to TSMC, a decision influenced by the lower yield performance experienced with Samsung. There had been rumors that Qualcomm would adopt a dual-sourcing strategy to mitigate costs, which would involve splitting orders between Samsung and TSMC. However, it appears certain external forces have steered Qualcomm towards a singular alliance with TSMC.
To remain competitive and perhaps recapture Qualcomm’s business, Samsung is reportedly fast-tracking the development of its second-generation 3nm GAA (gate-all-around) semiconductor process, aiming to start mass production in the second half of 2024. Additionally, Samsung is believed to be working on its 2nm GAA technology. Yet, Apple’s COO Jeff Williams has reportedly made arrangements with TSMC to procure the initial batch of 2nm wafers, highlighting the intensity of the competition between the two semiconductor giants.
The progressive moves by both foundries suggest that the landscape of chip manufacturing is evolving. As competition heats up, Samsung’s current strategies and investments in advanced semiconductor technologies could sway Qualcomm to reconsider its sourcing arrangements in the future. This development reflects broader industry trends, where the battle for supremacy in chip manufacturing is not only about technological prowess but also securing strategic partnerships.
