Samsung Electronics Co. has lost Qualcomm Inc.’s 7-nanometer (nm) chip order to Taiwan-based Taiwan Semiconductor Manufacturing Company (TSMC). The latest blow would impede the leading Korean chipmaker’s latest efforts to expand its dominance in pure-play foundry business.

According to industry sources on Sunday, American wireless chip giant Qualcomm was said to have asked TSMC, the world’s largest contract chipmaker, to produce 7nm chips that it is planning to launch around the end of this year. Samsung Electronics has competed against TSMC that also produces application processor for Apple Inc.’s iPhones in winning the order.

As of 1:54 p.m. on Monday, shares of Samsung Electronics stand at 2,265,000 won ($2,011.37), down 40,000 won or 1.74 percent from the previous session.

Samsung Electronics’ reported defeat by its Taiwanese rival in the 7nm chip order comes after it has faced a delay in developing the related fabrication technology. After TSMC lost in the previous competition to win an order to supply 10nm chips for Qualcomm to Samsung Electronics, TSMC has accelerated its efforts to develop the 7nm chip technology and successfully won the latest order, according to sources. The Qualcomm’s 10nm chip order makes up nearly 40 percent of Samsung Electronics’ 5 billion won foundry revenue.

The latest loss will likely place a stumbling block to Samsung Electronics’ ambition of nurturing its foundry business to the world class. It last month announced a plan to separate its foundry business into a new unit as part of efforts to up its share in semiconductor outsourcing market.

It was not the first time for the Korean chipmaker to lose its major client to the Taiwanese rival. Apple’s chip orders for its application processors had been shifted from Samsung Electronics to TSMC in recent years and the Taiwanese company has reportedly secured Apple’s new orders on it next generation chip.

Industry watchers say Samsung Electronics also stays behind TSMC in post-fabrication process such as packaging. TSMC is said to have contributed in making Apple’s mobile devices thinner with its advanced packaging technology, but Samsung Electronics is yet to develop the similar technology.

Following the delay in the development of the 7nm chip manufacturing process, the Korean tech company recently released 8nm process node, an upgrade version from its 10 nm process without any major alteration, and unveiled a roadmap of introducing the 5nm technology in 2019 and 4nm in 2020. It also plans to start mass producing chips on 7nm class technology for its new Galaxy Note smartphones to be launched next year.

By Lee Dong-in

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