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Samsung is betting $116 billion EUV is the way forward for chip manufacturing

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EUV machine by ASML
Image: ASML

In 2019, Samsung encountered several challenges concerning its semiconductor business. Early in the year, the firm endured falling component sales due to a soft smartphone market and a memory chip glut. Moreover, the Burn-In reported the South Korean conglomerate lost millions of dollars in DRAM due to a contamination incident.

However, a recent Bloomberg report indicates the firm has a plan to revive its integrated circuit segment in a major way. Samsung is spending $116 billion to develop extreme ultraviolet lithography (EUV) manufacturing infrastructure. Primarily, the firm wants to use the cutting edge technology to dominate the rapidly emerging custom enterprise chip market.

What is EUV?

In the late 90s, a Dutch company called ASML began developing equipment capable of fabricating high-performance chips at the nanometer scale using ultraviolet light.

With investments from Intel, TSMC, and Samsung, the firm created next-generation lithography tech capable of harnessing light at 13.5 nanometers. As the previous iteration of lithography machines used wavelengths at 193 nanometers, ASML’s innovation represented a significant step forward.

After years of research and development, the firm’s $172 million EUV machines are now capable of volume manufacturing. Indeed, Samsung and TSMC intend to use ASML’s equipment to begin producing 5-nanometer chipsets in 2020. However, while the Taiwanese foundry is interested in creating 5G components, Samsung wants to handle Big Tech’s custom processor production.

Samsung’s Custom Enterprise Chipset Strategy

In recent years, the world’s largest technology companies have begun developing custom chipsets to meet their particular needs. Amazon uses ARM-based Graviton processors to manage its cloud computing operations. Chinese conglomerate Alibaba made the Hanguang 800 to expedite indexing on its e-commerce platforms. Also, Apple has been bringing its component resources in-house for the last decade.

While the above-listed corporations all have considerable financial and development resources, they lack semiconductor manufacturing capacity. Moreover, they don’t have the equipment to fabricate large quantities of custom high-performance processors. However, thanks to its work with ASML, Samsung has the capability to produce next-generation chipsets.

Bloomberg noted the South Korean conglomerate would spend $116 billion over the next 10 years to develop its EUV production facilities. Indeed, the firm just opened a $17 billion EUV plant in Hwaseong that will commence mass production in February 2020.

According to Citigroup, once the corporation’s factory achieves economies of scale, its production time will decrease by 20 percent. Moreover, the firm believes its foundry output will increase by 25 percent. As a result, Samsung stands a good chance of reaching its goal of becoming the predominant custom enterprise foundry. The technology giant also has the potential to retake its former place as a leading innovator in the semiconductor space.

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