On December 13th, at the semiconductor cooperation agreement ceremony held at the headquarters of Dutch lithography giant ASML, South Korean semiconductor giant Samsung Electronics signed a memorandum of cooperation with the company to establish an EUV joint research center.
According to the memorandum, the EUV Joint Research Center will be located in the capital region of South Korea, and Samsung Electronics and Asma will jointly invest 700 million euros (approximately 1 trillion Korean won) to develop the next generation of exposure devices. Through the establishment of a joint research center with ASML, Samsung Electronics announced plans to introduce ASML's next-generation exposure equipment in advance and increase the production proportion of the latest products to lead innovation in storage microfabrication.
In order to maintain competitiveness with industry partners on the advanced process track, Samsung Electronics has currently invested heavily. According to financial reports, Samsung Electronics invested over 23 trillion Korean won in chip infrastructure in the first half of this year, which is twice the amount of the same period last year. In addition, in order to maintain ASML as an important partner, Samsung Electronics acquired a 3% stake in ASML for around 700 billion Korean won in 2012, becoming its second largest shareholder.
However, price fluctuations in the storage industry have also affected Samsung Electronics' performance, and balancing costs and profits in advanced processes will be an important challenge for Samsung in the next stage.
Advanced Process of "Chasing Deer" by Large Storage Companies
Extreme Ultra violet lithography machine, also commonly known as EUV lithography machine, is a lithography technology that uses extreme ultraviolet light with wavelengths of 10-14 nanometers as the light source. This device can currently be applied to the manufacturing of advanced process chips at 14nm and below.
Since being the first to apply EUV lithography technology to the mass production of 14 nanometer DRAM chips, Samsung Electronics has been pushing for the implementation of this technology on the DDR5 product line.
According to public information, Samsung announced in May this year that it will begin mass production of 12nm level 16Gb DDR5 products. Compared to the previous generation of products, Samsung claims that the latest product has reduced power consumption by 23%, increased wafer productivity by 20%, and can support up to 7.2Gbps transmission speed. Subsequently, in September of this year, Samsung announced the development of a 32Gb DDR5 memory chip, which is expected to be mass-produced by the end of this year.
In addition to Samsung, two other giants in the storage industry are also using advanced processes to focus on DDR5. SK Hynix launched the world's first DDR5 product in October 2021, catching up with two other industry competitors. Subsequently, in May of this year, the company announced the completion of the fifth generation 10 nanometer scale (1) for DRAM β） Technology research and development, and stated that it will supply Intel with related products with built-in technology.
In terms of time, Samsung introduced EUV technology into the industry in 2021, while Micron's technology roadmap planning started relatively late. Micron plans to include EUV in the DRAM development roadmap starting from 2024. In October this year, the company announced that it had taken 1 β Process technology has been applied to the development of 16Gb DDR5 memory and has been shipped to all customers in the data center and PC markets.
Looking at the market, despite the setbacks of price cuts, production cuts, and destocking experienced by all three major manufacturers in the context of a downturn in the entire storage industry, it seems that this has not affected their efforts to promote the layout of DDR5 products. Micron Technology stated at its performance briefing at the end of September that the company expects its DDR5 shipments to exceed DDR4 by the end of the first quarter of 2024, exceeding the industry's progress rate.
Focusing on the benefits of advanced manufacturing processes for storage product performance, many application manufacturers have launched hardware devices for DDR5, such as Intel's MeteorLake processor, which only supports DDR5 and LPDDR5; AMD's Ryzen 7000 also only supports DDR5. Market research firm Yole Development analyzed that the memory transition from DDR4 to DDR5 will be very rapid. TrendForce Consulting predicts that the proportion of global wafer foundry mature processes (28nm and above) and advanced processes (16nm and below) production capacity will remain around 7:3 from 2023 to 2027.
Samsung's Challenge
As the storage industry enters a downward cycle, Samsung Electronics' performance has been affected since the first half of this year.
In order to alleviate financial pressure, Samsung Electronics not only borrowed 20 trillion Korean won from its parent company Samsung Group, but also sold some shares in BYD and SFA Engineering. At the same time, Samsung Electronics is also gradually selling shares in ASML. As of the end of June this year, Samsung Electronics' shareholding in ASML has decreased from the original 3% to only 0.7%.
At the same time, industry insiders have observed that although Samsung Electronics currently holds the top spot in the storage market share, from the perspective of the DDR5 market, SK Hynix's products seem to be more popular due to their earlier market entry and higher yield. According to analysis by New Korea Investment Securities, among the three giants of DRAM, Samsung, Micron, and SK Hynix, SK Hynix's new generation process (1) β） The development progress is relatively ahead, and it is expected that SK Hynix can win the market championship in the DDR5 field by 2024.
Guo Zuorong, Senior Vice President of Research at TrendForce Consulting, analyzed that Samsung Electronics is currently striving to catch up with TSMC in the field of advanced processes.
In the field of advanced manufacturing processes, TSMC has always been the object of competition among industry enterprises. In the third quarter of 2023, the proportion of TSMC's 3nm process to total revenue reached 6%; 5 nanometers account for 37%; 7 nanometers account for 16%, and the overall revenue from advanced processes (including 7nm) has reached nearly 60%.
TSMC President Wei Zhejia pointed out at a recent performance briefing that the 3-nanometer process has good yield, and the demand in the second half of the year will benefit from high-performance computing and smartphone drivers. The annual revenue contribution is expected to be about 4% to 6%, and it will be even higher next year. The N3E process has been validated and achieved yield targets, and will be mass-produced in the third quarter. He believes that 3 nanometers will serve as a long-term process node and will continue to develop processes such as N3P and N3X in the future.
As for the more advanced 2-nanometer N2 process, Wei Zhejia stated that the research and development progress is smooth, and it will enter mass production as scheduled in 2025. He pointed out that AI related requirements require energy efficiency improvement, so customer participation and time are earlier, and interest in 2-nanometer will be equivalent to or higher than 3-nanometer. It is expected that the 2-nanometer process will be the most advanced process in the industry after its mass production launch in 2025.
According to research data provided by TrendForce Consulting, the capacity utilization rate of Samsung's 8-inch factory is expected to be around 41% in the fourth quarter of 2023, which is at the bottom of the industry. The capacity utilization rate of the 12 inch factory is about 66%, which is below average in the industry.
"From the low utilization rate of 12 inch production capacity, it can be seen that without more customer orders, it is difficult for Samsung Electronics' technology to improve efficiency," said Guo Zuorong.