Samsung Electronics announced on June 30 that it will mass-produce 3-nanometer process chips, becoming the first in the world and demonstrating its ambition to catch up with TSMC in the foundry business. However, Nikkei Asia reported today that Samsung did not disclose any customer information, so people in Seoul’s financial district questioned “Who are the customers?” The importance of this question is that the customer who purchased the first batch of chips can prove the level of the chip.

Samsung’s press release at the end of June to produce 3-nanometer chips only said that the chips would initially be used for “high-performance computing applications”. The chips are not made at the Pyeongtaek manufacturing plant, but will be made at the Hwaseong complex, which is also where manufacturing technologies are developed, prompting observers to suspect that the production scale will be small, the report said.

The first recipients of computing chips will include cryptocurrency miners in China, according to suppliers and other sources, but due to the recent slide in cryptocurrency prices, customers may not be reliable in the long run, the report said.

The report said that Samsung’s foundry business has been accused of problems since early 2021. The company started mass production of 5-nanometer chips in the second half of 2020, but failed to improve yields. Samsung has been unable to provide its biggest customer Qualcomm with a steady supply of smartphone chips. Ultimately, Qualcomm expanded its orders to TSMC last fall, causing Samsung to lose orders.

South Korea’s Samsung Electronics announced three years ago that it would become the world’s largest foundry leader in chip manufacturing. Three years later, its biggest rival, TSMC, has captured a larger market share, prompting Samsung to replace many executives.

Nikkei Shimbun reported that Samsung announced on June 30 that it would start mass production of 3-nanometer chips, becoming the first company to achieve this milestone. It seems to be in the lead in the advanced chip competition, but this announcement did not explain the whole picture. A source in Yeouido, South Korea’s financial district, asked: “Who are the customers?”

This question is very important. Although chip size is a key indicator of a manufacturer’s technical capability, “who the customers are” can better prove the manufacturer’s technical capability, and the first shipment target is even more significant.

Samsung has so far not disclosed a list of customers for its 3nm chips, saying only that these chips will initially be used for “high-performance computing applications”. Samsung is also mass-producing 3-nanometer chips not at its Pyeongtaek plant, where the latest manufacturing equipment is set up, but at its Hwaseong plant, where manufacturing technology is developed, prompting observers to speculate that mass production is small.

Suppliers and other sources said Samsung’s first customers for these computing chips will include cryptocurrency miners in mainland China, but those customers may not be relied on for long because of the recent collapse in the value of cryptocurrencies.

All circles have pointed out problems to Samsung’s wafer business since the beginning of last year. Samsung’s 5-nanometer chips, which began mass production in the second half of 2020, could not improve the yield rate, so it could not stably supply smartphone chips to Qualcomm, its largest customer. Finally, Qualcomm expanded the number of orders it outsourced to TSMC in the fall of 2021, causing Samsung to lose orders.

On the other hand, TSMC, which started mass production of 5-nanometer chips roughly at the same time as Samsung, has also become the main foundry of Apple’s central processing unit (CPU) chips. Since Apple’s iPhone is the largest smartphone by sales, it must manufacture and ship the CPU within a very short cycle. At present, it is extremely difficult for the manufacturing equipment and technology of other manufacturers except TSMC to meet this requirement.

TSMC has further widened its lead over Samsung due to the very different performances of TSMC and Samsung in 5nm chips. TrendForce data shows that TSMC has won 56.3% of the foundry market, ranking first, far higher than the second-placed Samsung’s 16.3%.

TSMC’s specialty is foundry, so it can focus on the advantages of investing in cutting-edge technology. The company’s capital spending is expected to rise 46 percent this year to $44 billion, with 70 to 80 percent of it going to advanced products. TSMC is preparing to mass-produce 3-nanometer chips by the end of this year, and is also adding a production base in Hsinchu and Tainan.

From the perspective of other customers such as Apple, choosing TSMC also has huge benefits. Compared with Samsung, TSMC is not a direct competitor of these customers in the smartphone market, and can trust TSMC with the confidential data of chip design with greater peace of mind. TSMC’s off-the-shelf design data is also particularly complete to support customers’ semiconductor designs.