Samsung Electronics has delayed deliveries of ASML chip-making equipment at its new Texas factory because it has yet to win any major customers for the project, citing The Korea Times. The delay poses a new setback to the ambitions of Samsung Chairman Lee Jae-yong of the Taylor project, which is at the heart of Samsung's chairman Lee Jae-yong's expansion of its core business, which Lee wants to expand from its main memory chip business to foundry chip manufacturing, where Taiwan's TSMC dominates.
This highlights the widening gap between Samsung and competitors such as TSMC and SK hynix, which are ramping up production of high-end chips to meet the growing demand for AI applications. Samsung is also delaying orders from some other suppliers at the $17 billion plant, prompting them to look for other customers and send home workers deployed at the site. The delay reflects a widening gap between Samsung and rivals such as TSMC and SK hynix, which are ramping up production of high-end chips to meet the booming demand for AI applications.
ASML, the world's largest supplier of chip-making equipment, cut its sales forecast for 2025 on Tuesday, citing weakness in markets other than the artificial intelligence market and delaying production of fabs. Both Samsung and ASML declined to comment on the matter.
In addition, production plans for Samsung Electronics' new plant in Texas have been postponed until 2025. The decision could be a major blow to the Biden administration's goal of increasing domestic chip supply in United States. Earlier, Samsung Electronics' top executive Choi Se-young said that the company's chip plant in Texas will start mass production in 2025, which is inconsistent with the previous commitment to start production in the second half of 2024. This postponement may be related to production delays at TSMC's new factory in Arizona.
Figure: Samsung may delay the delivery of ASML chip equipment (Source: The Korea Times)
Despite years of trying to compete with TSMC, Samsung's market share in contract manufacturing, known as fabs or foundries, has fallen by 8 percentage points over the past five years to 11% as of the first quarter of 2024, while TSMC's market share rose to 61.7% over the same period, according to research firm Statista. Analysts say Samsung's decline in market share highlights the company's technical challenges in mastering advanced chip manufacturing technology.
According to reports, the main reason for Samsung's delay in chip production at the new United States factory is the United States government's failure to provide the promised subsidy funds in a timely manner. Although the CHIPS and Science Act was passed by the United States in 2022 and pledged $100 billion to subsidize semiconductor companies that manufacture chips in the United States, so far only the United States subsidiary of the United Kingdom Bayi Systems Group has received $35 million.
Samsung is also concerned that its rival Intel Corp. could receive more production subsidy funding. There are reports that Intel may receive up to $4 billion in production subsidy funding sooner than other chipmakers. Based on these concerns, Samsung is aggressively lobbying politicians for a more equitable distribution of subsidy funds by the United States government.
In addition, Samsung is also considering upgrading its factory in Taylor to produce more advanced 2nm chips instead of the 4nm chips originally planned. Samsung will make a final decision on this in the third quarter of 2024. The upgrade comes on the heels of Samsung's recent appointment of a new CEO of its semiconductor business (Device Solutions Division) to focus on new growth opportunities.
