News Article

Japan crackdown risks delay for Samsung’s advanced chip debut

Questions arise surrounding the intention of Samsung to contest TSMC

Samsung Electronics‘ intention to launch its most advanced processor chip next year risks delays as a consequence of Japan’s tighter export controls on semiconductor materials vital to the South Korean sector, journalists acquainted with the issue informed the Nikkei Asian Review.

Tokyo Ohka Kogyo (TOK), Shin Etsu Chemical and JSR, three significant suppliers of photoresist chemicals to Samsung’s latest and most cutting-edge chipmaking project, told Nikkei they didn’t understand if their deliveries could proceed as usual pending the implementation of new checks on July 4. A junior public representative informed Nikkei that Japanese firms were needed to stop all deliveries until they received a state permit for each exchange. This could take up to 90 days or even shorter, he said, based on each situation.

One individual near to the sophisticated chipmaking schemes of the company said aspects of Samsung’s study program had already been impacted. “The company has to put some of the EUV (extreme ultraviolet photoresist)-related chip development on hold for the time being to ensure that the crucial photoresist supply can be secured in the future,” the person said.

Any interruption in the production of EUV photoresist— a fabric material used in extreme ultraviolet lithography essential to the most complicated semiconductors— could undermine Samsung’s intentions to release its 7-nanometer chips around the beginning of the year.

READ: Huawei woes likely halve Samsung Electronics’ second-quarter profit

The advanced mobile and networking processors are crucial for next year’s rollout of Samsung’s flagship smartphone as well as its 5 G telecom facilities. But they are also essential to the company’s intention to more than double its sophisticated order chipmaking stake from less than 10 per cent to 25 percent by 2023, in a plan to bring industry leader Taiwan Semiconductor Manufacturing Co. Analysts expressed fear over the timetable for its sophisticated product venture. “We are still worried about whether Samsung can ensure sufficient availability of high-end photoresists in time for their cutting-edge device manufacturing program,” said Mark Li, a former semiconductor consultant at Bernstein Research. “It is highly difficult to substitute photoresist vendors.” “If the restriction is not resolved rapidly,[ this] limitation will delay Samsung’s capacity to create its fresh processor chips for smartphones,” he clarified. It could also undermine “its desire to carry out the most sophisticated device manufacturing technologies and… its ability to capture stock from TSMC.” Industry officials said the degree of disturbance relied on the duration of the conflict between Seoul and Tokyo, which recognised that it is attacking South Korea’s key business in retribution for the country’s inaction over WWII judicial rulings

Japan’s sudden crackdown this month on the export of three semiconductor-related products— photoresist, fluorinated polyamide, and etching gas— has created issues about the effect on the global economy. Samsung Electronics and SK Hynix, the world’s two biggest storage device suppliers, regulate over 70 per cent of the world’s DRAM industry and over 40 times of the worldwide NAND flash industry. For the large bulk of these significant chipmaking components, they both depend strongly on Japanese providers.

EUV photo-resistant provider, TOK, said it was now “not clear” whether its scheduled fresh plant in South Korea— to promote its customer’s sophisticated chip-making venture— would still be on the path to begin manufacturing by 2020. JSR, another EUV provider, was unsure as to whether its Belgian plant would be willing to deliver South Korean clients, considering that some techniques were produced in Japan.

Shin Etsu, who also provides Samsung with an EUV photoresist, informed Nikkei that he only manufactured the item in Japan and so applied for an export permit. This could mean 90 days, a spokesman recognised.

While Samsung is known to have set up a three-month inventory of etching gas, used to make both memory and non-memory chips, it is harder to keep stocks of EUV photoresist layer vital to sophisticated chip making, several reports said. It expires within decades of release and needs such challenging processing circumstances that it is unrealistic to store vast amounts for the long term, the reports said.

“These items are very uncommon for chip companies to store,” said one chip sector manager.

In the short term, replacing Japanese vendors of EUV photoresist with alternate sources was also unrealistic. “It’s not completely difficult to substitute those Japanese vendors, but it would require a year to accomplish that, as the chip manufacturing method together with chip models has to be tried all over again,” said one individual acquainted with the subject.

Only a couple of large chipmakers like Samsung and TSMC have expensive and complicated technology to create the 7-nanometer chips. TSMC is scheduled to be the first to sell a computer using EUV technology by the beginning of this year.

Samsung is the world’s longtime No.1 storage chipmaker in the DRAM and NAND flash classifications and produces chips for both its products and internal clients. Japanese export controls do not continue to have had a severe effect on Samsung’s video card manufacturing, as the sector has already suffered from an over-supply that has dropped rates over the past year, reports informed the Nikkei Asian Review.

However, its aspirations to contest Taiwan’s TSMC as the world’s largest bond chipmaker across the table could be postponed by the checks if the scenario persists and approvals are not provided quickly, several reports said.

READ: Samsung plans US$116 billion investment in non-memory chips to challenge TSMC, Qualcomm

The South Korean firm announced in April that it plans to spend 133 trillion Korean earned ($113 billion) by 2030 to reinforce its non-memory logic device business, a step commonly viewed as a definite obstacle to TSMC’s worldwide situation.

The world’s two largest semiconductor manufacturers— Samsung and TSMC—-have lengthy struggled to create the most sophisticated device manufacturing technology to promote cutting-edge processors, artificial intelligence, and modems. Chip designers like Apple, Huawei, Samsung, Qualcomm, and Nvidia have tended to line up in different camps as they prepare for new technologies like 5G, artificial intelligence, and autonomous driving. Apple and Huawei are TSMC clients, while Qualcomm and Nvidia preferred to put commands with both TSMC and Samsung, reports said.

Qualcomm did not react to the petition for feedback from the publishing of the Nikkei Asian Review. Nvidia informed the Nikkei Asian Review in a declaration that it employs both TSMC and Samsung for manufacturing, and “we intend to proceed using both foundries in the future.” Samsung did not react to the petition for remarks from the Nikkei Asian Review. Nikkei revealed previously that Samsung Electronics deputy president Lee Jae-yong and de facto chief executive of the group went to Japan on Sunday to encounter with managers from Japan’s megabanks and company associates.

South Korean President Moon Jae-in on Wednesday told executives from 30 South Korean conglomerates, including Samsung, that “we can not leave out the option of prolonging the scenario, given our international attempts to address the problem,” Reuters revealed.

CIMB Bank - Best exchange rate SG > MY

Login to your account below

Fill the forms bellow to register

Retrieve your password

Please enter your username or email address to reset your password.