Intel has reportedly approached senior executives at Samsung Electronics with a proposal to form a "foundry alliance" against the market-dominating TSMC. This move comes in the wake of Intel and Samsung finding themselves in hot water with both of their foundry operations. The potential collaboration between these two major players has become a focal point of interest within South Korea's industry.
Struggling TSMC foundry rivals joining hands
In an exclusive industry report, Korean media outlet Daily Economic News revealed a senior executive from Intel recently proposed a meeting between Intel CEO Pat Gelsinger and Samsung chairman Jae-Yong Lee to discuss comprehensive cooperation in the foundry sector.
Recently, both Samsung and Intel have faced difficulties in their foundry businesses. Some industry insiders in South Korea believe that Samsung should consider divesting its foundry operations. In response, Lee previously stated to foreign press that he does not plan to separate the foundry and logic chip design businesses, emphasizing that Samsung will continue to expand its market presence and promote related business development.
Intel and Samsung echo each other's dilemma. In 2021, Intel announced its return to the foundry market. Although it signed contracts with companies like Cisco and Amazon AWS, the large clientele it expected to attract did not materialize. Samsung's foundry division, on the other hand, was elevated to an independent unit in 2017, and while it actively seeks large customers, the gap with TSMC continues to widen.
According to recent data released by research institutions, in the second quarter of 2024, TSMC holds approximately 62% of the foundry market share, while Samsung accounts for about 12%. In advanced process technologies such as 3nm and 5nm, TSMC's market share exceeds 90%.
Wide range of collaborations
Analysts suggest that if Samsung and Intel do indeed forge a "foundry alliance", the two titans could engage in extensive collaboration on process technology exchange, shared production equipment, and joint research and development efforts.
For instance, Samsung possesses 3nm Gate-All-Around (GAA) process technology, while Intel has Foveros technology for integrating different process chips into a single package, along with PowerVia back-side power delivery technology aimed at enhancing energy efficiency. Both companies may collaborate in areas such as AI, data centers, and mobile application processors (AP), jointly driving the development of high-performance, low-power products.
Additionally, Samsung operates manufacturing facilities in the US, South Korea, and China, while Intel has factories in the US, Ireland, and Israel. When necessary, they could also share orders or facilities. Notably, amid increasing regulations on advanced chip exports from the US and the European Union, regional production adaptability is becoming increasingly important.
Some analysts also point out that Intel's attempt to ally with Samsung may be linked to substantial subsidies from the US government. Despite Intel considering a spin-off of its foundry business in September 2024, the company has received significant funding from the US government. For Intel, maintaining its foundry operations in the US is crucial, which may explain its outreach to Samsung.
Experts in South Korea note that even if an alliance between Intel and Samsung comes to fruition, while there may be many synergies, TSMC's dominance in the foundry market would remain strong. Therefore, expectations for immediate results from this partnership may need to be tempered.
Regarding rumors of Intel CEO Gelsinger planning to meet with the Samsung chairman, both Samsung and Intel declined to comment. Gelsinger has visited South Korea several times in the past but has never publicly met with Lee.
