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Covid-19 Can Undermine Samsung’s 5nm Plans

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Samsung’s 5nm plans seem to be in jeopardy now because of the coronavirus. A report from South Korea claims that the outbreak will interfere with the company’s ability to import the required equipment and get on with the production plans.

Samsung sources extreme ultraviolet (EUV) exposure equipment from ASML. The Netherlands-based manufacturer is the only one to make such equipment.

Due to the pandemic, it’s facing difficulty exporting the gear. And without it, semiconductor makers like Samsung and TSMC will be severely impacted.

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However, the delay in shipment will apparently deal a bigger blow to Samsung’s 5nm process than TSMC’s. That’s because Taiwanese companies made up 51 percent of the Dutch company’s EUV equipment sales in 2019. TSMC was supposedly the biggest client.

This timely stockpiling will soften the blow for TSMC. It seems like the company is on track to begin production of 5nm semiconductors for AMD, Apple, Huawei and Qualcomm from this quarter.

However, the Taiwanese foundry will likely have to delay the test production of 3-nm semiconductors to Q4 2020. But given that 5nm is said to be the next full node after 7nm, it matters more currently.

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That’s why Samsung seems to be in greater trouble. Korean companies accounted for just 16 percent of ASML’s shipment last year. Thus, we can surmise that the company doesn’t have enough to proceed with the mass production of 5nm semiconductors. Whatever equipment it bought last year was supposedly for DRAM production anyway.

Samsung’s 5nm plans must go ahead per schedule for it to chase TSMC

Samsung is vying to be the top player in the semiconductor market by 2030. However, TSMC has a comfortable lead right now and the gap is only widening.

If Samsung is unable to stick with its production plans for the year, the situation will only worsen. Although the company was the first one to use EUV in the foundry process, TSMC caught on quickly.

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Right now, the EUV-based foundry industry is something of a duopoly and if Samsung fails to catch up, it may very well become a monopoly down the line.

Previously, it was reported that Samsung has delayed the mass production of 3nm chips until 2022 because of COVID-19. The initial plan was to get to work by next year. However, because of the pandemic, it wasn’t able to go ahead with the scheduled installation of equipment needed for production lines.

So, by the looks of it, TSMC will likely beat Samsung to the market by presenting 3nm chips first.

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Other than Samsung’s 5nm plans, the company’s smartphone sales are also said to be suffering because of the coronavirus. A recent report says that the Galaxy S20 series will end up being the worst-selling S range ever.

But Samsung is said to be a firm that thrives in crises. Thus, we won’t be surprised if it’s at the top of its game again by next year. That’s not to say its performance is sub-par by means. After all, it’s an industry leader in many segments, including smartphones.

But of course, to maintain that lead, it will have to continue doing better. We will have to wait and see what it does about the 5nm plans and dwindling flagship sales.

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