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Samsung looks to woo more Silicon Valley chipmakers to use its factories

Samsung has already won business from Apple and Qualcomm thanks to a manufacturing advantage over rivals.


Samsung Semiconductor executives were in Silicon Valley this week in an effort to convince more chipmakers to use the Korean firm for manufacturing.

Though best known as a maker of its own brand of electronics, Samsung has a chipmaking business that has aggressively been seeking outside business, landing both Apple and Qualcomm as recent customers.

This week Samsung held an invite-only event at its San Jose office, aiming to convince both existing and potential customers that it will lead with the next generation of chip technology as it did with the current 14-nanometer manufacturing process.

“We think we are leading again,” Samsung Semiconductor senior director Kelvin Low told Re/code. “This is not a one-time success story.”

Low said that the company will have the thinner, 10-nanometer chipmaking technology in production later this year. At the event, Samsung announced plans for a new cost-optimized 14-nanometer process as well as a second generation of 10-nanometer technology that it says will offer 10 percent better performance than the first generation.

However, Samsung is not alone in claiming a lead in the next generation of chips.

“Everyone, including TSMC, Samsung and Intel, [is] saying in some way they are leading in 10-nanometer,” said Moor Insights & Strategy analyst Patrick Moorhead.

Depending on the metric, they all may have a case, Moorhead said, adding that it’s not just about who gets there first: Costs and yield rates matter, as do other technical factors.

Thinner wiring allows for chips that offer greater performance and better battery life, with power efficiency being increasingly important for both mobile devices and the servers and other gear used in mass for data centers. Smaller wiring can also provide a cost advantage, assuming companies are able to produce the chips in roughly similar volumes.

For years there has been a concern that as chip designs continued to shrink, physical limitations would eventually mean an end to Moore’s Law — the industry dictate that holds that performance can double every 18 months to two years.

“Instead of Moore’s law slowing down, it’s accelerating,” said chip expert Dan Hutcheson, CEO of VLSI Research. Samsung, in particular has shown a rapid ability to improve on its manufacturing process in recent years.

Samsung’s lead in 14-nanometer technology gave its homegrown chips a performance advantage over processors made at rival facilities, in part accounting for Samsung’s decision to use its own processor and modem in last year’s flagship Galaxy S6 and Galaxy Note phones. For this year’s Snapdragon 820 chip, Qualcomm shifted to Samsung’s factories from those of Taiwanese rival TSMC in order to win back Samsung’s business.

Hutcheson said that in the past Samsung only wooed a few top chip customers to its factories, but now the company is taking on the standalone chip foundries head-on.

“They basically, in this meeting, showed they can go toe-to-toe with any foundry in the world — if not be better,” he said.

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