Samsung have been quietly investing in their semiconductor businesses for some time now, including working on new technologies to shrink the die size acquiring engineers from other semiconductor manufacturers, such as AMD. In 2015, we've seen the new generation Exynos 7420 stand head and shoulders over the competitor System-on-Chips, or SoCs, when it comes to performance thanks in the most part to Samsung leapfrogging the competition and being able to successfully shrink the processor die size down from the 20nm point to 14nm. The key advantages in shrinking a processor are that the smaller chip requires less voltage to perform, which reduces power consumption and heat output proportional to the square of the voltage applied. Also, smaller chips require less space, which makes product design engineers' lives easier as it leaves more space for other components. And as there is less distance for electrons to travel inside a smaller processor, for a given clock speed the chip can perform better, too. However, Samsung's semiconductor expertise is not limited to the SoC but also includes the mass storage chip, which in the new Samsung Galaxy S6 and S6 Edge is faster and more efficient than older generation memory chips.
However, whilst the business is benefiting from years of development, Samsung are not stopping here but are instead going to continue investing in their semiconductor future. This is an important point – all companies must continually invest in their future simply to stand still and this is even more important in a quickly evolving market such as smartphones and semiconductors. Samsung's confidence in their current and future chip components is highlighted by their increased investment into facilities during 2015, which is going against the grain. According to the source material, Samsung is the only semiconductor expanding their chipmaking operations in 2015. And this makes sense when we consider that whilst not every smartphone manufacturer will want to license and use the Exynos 7420 (I am looking at Apple here), almost every manufacturer seems to be considering dipping into the Samsung 14nm shop for their next generation product. Samsung have the know-how and are increasing their manufacturing resource to take advantage of this demand.
Last week, Samsung announced it is planning to built a new chip manufacturing plant in Pyeongtaek, around 50 miles south of Seoul: this is expected to be producing chips by the second half of 2017. Samsung are spending over $14 billion on semiconductor plant production lines in the next seven months, doubling the existing $7 billion they've spent in the first quarter of this year. Comparing and contrasting this around the industry, and Intel have reduced investment in 2015 by $1.3 billion. TSMC, Taiwan Semiconductor Manufacturing Co., another major semiconductor manufacturer with a major Apple contract, have cut investment by $1 billion this year. Samsung clearly have great confidence in their semiconductor business, but going on how competitive the Exynos 7420 is compared with the competition, this is perfectly understandable.