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

FirstArmada · June 13, 2017

Source:

https://www.xda-developers.com/qualcomm-ends-foundry-partnership-with-samsung-and-entrusts-7nm-process-to-tsmc/

Alt:

http://www.androidauthority.com/qualcomm-drops-samsung-to-work-with-tsmc-at-7nm-779197/

Quote:

Quote

According to a report from Korea, Qualcomm has chosen to work with TSMC instead of its current partner Samsung to produce its next-generation 7nm application processor. Qualcomm has reportedly been designing and developing a 7nm Snapdragon platform using tools distributed by TSMC since H2 2016. This report marks the second major partner loss for Samsung in recent months. Apple, a long running customer, has made the switch to TSMC for the A11 chip for the next iPhone.

Damn another loss for Samsung's foundry business, although apple did buy 70 Million OLED panels from Samsung for the iPhone 8

Full Articles:

www.androidauthority.com

Spoiler

According to a report from Korea, Qualcomm has chosen to work with TSMC instead of its current partner Samsung to produce its next-generation 7nm application processor. Qualcomm has reportedly been designing and developing a 7nm Snapdragon platform using tools distributed by TSMC since H2 2016. This report marks the second major partner loss for Samsung in recent months. Apple, a long running customer, has made the switch to TSMC for the A11 chip for the next iPhone.

Qualcomm has been making use of Samsung’s industry leading manufacturing processes for its most recent flagship mobile platforms. Last year’s Snapdragon 820 and 821 were built using Samsung’s 14nm technology, and this year’s Snapdragon 835 flagship uses the company’s cutting edge 10nm process. TSMC has been Qualcomm’s flagship chip partner in the past though, producing the company’s 810 and 808 flagship mobile SoCs in previous generations.

Based on our recent look at the major foundries and the race to the next generation 7nm node, it appears that TSMC is some way ahead of the competition, which includes Samsung and Globalfoundries. The company missed out on 10nm to invest more quickly in 7nm, and is expected to be able to meet meaningful 7nm production volumes before the end of 2018, making it ideal timing for 2019 smartphone launches that use a flagship chip from Qualcomm.

Samsung, by comparison, is looking to be a few months behind TSMC in terms of entering volume production, and combined with the use of newer Extreme Ultraviolet Lithography technology, there would be concerns that yields won’t be able to meet Qualcomm’s large demand by early 2018. We’ve already seen the impact that a slightly delayed Snapdragon 835 had on Qualcomm’s OEM partner announcements this year, and there will be extra pressure to ensure sufficient supply of chips going forward.

It’s also worth noting that ARM, which offers processor licenses to Qualcomm, has been working closely with TSMC to offer its partners expedited access to 7nm technology. Combined with the the company’s recently unveiled DynamIQ technology for next-generation application processors, there are a number of contributing factors that make TSMC the more appealing choice.

The news is clearly a major blow for Samsung, which had been depending more heavily on its semiconductor business lately to offset the ups and downs of the competitive smartphone market. According to market data, Samsung’s foundry business generated around $4.44 billion (5 trillion KRW) in sales last year, $1.78 billion (2 trillion KRW) or 40% of which came of Qualcomm’s application processors. Combined with the loss of Apple’s business, the division is certain to see its financial performance drop sharply in the coming years.

However, Samsung has been doubling down on on its system-on-a-chip business recently, moving around 200 employees from its consumer electronics division into its LSI business unit. It’s easy to see why, with the industry reaching a US$343.5 billion valuation last year, with memory and SoC sales accounting for 23% and 77% respectively. The company has also outlined its commitments for foundry processes all the way down to 4nm, along with improvements to existing 28 and 10nm technologies. Perhaps Samsung will be able to offset the loss of these major partners by taking up additional orders from mid-tier rather than cutting-edge products in the short term, before customers return when its EUV technology has matured.

For Qualcomm, TSMC, and us smartphone users, this news looks to ensure a decently supply of 7nm Snapdragons for flagship smartphones that will likely hit the market in early 2019, providing that TSMC remains on schedule.

www.xda-developers.com

Spoiler

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.