Samsung has reportedly secured chip manufacturing orders from Cisco and Google. According to a new report from South Korean publication ETNews, Samsung received the contract from Cisco earlier this year. The chip will be used in the American network equipment giant's next-generation telecommunication network.
Samsung will be responsible for the entire chip manufacturing process from design to production. It is currently working on the development of the chip’s design, the report claims, citing an industry insider who is familiar with the matter.
The South Korean conglomerate has also received a contract from Google for designing and manufacturing a semiconductor chip. This chip will reportedly go into a sensor that can measure body movements.
Samsung secures chip manufacturing orders for Cisco and Google
Samsung's efforts of overtaking TSMC and becoming the largest foundry in the world may have just gotten a much-needed boost. And the company is taking a different approach to achieve its goal.
Usually, foundries only manufacture a customer's chips that have already been designed. However, according to the report, Samsung is not only manufacturing the chips for Cisco and Google but designing them as well. This essentially means the company will have to develop customized features and technologies needed by its customers.
The exact worth of Samsung's contracts with Cisco and Google are not known yet. However, given Cisco is the world’s largest network equipment manufacturer, the contract should be quite big. California based Cisco Systems makes over $50 billion in revenue annually.
Google is also looking to strengthen its hardware business, which includes Pixel smartphones, Home and Nest speakers, home automation devices, and much more. The internet giant may also soon start making smartwatches and fitness bands, once its $2.1 billion Fitbit acquisition gets regulatory approvals.
It's unclear where Google plans to use the Samsung-designed and manufactured semiconductor chip. But it should be safe to assume that the orders will have a meaningful impact on Samsung's foundry business. Reports earlier this year suggested that the South Korean company is also developing a custom Exynos chipset for Google.
Samsung's foundry business is seeing a strong growth
Apart from TSMC, Samsung is the only other foundry with chip manufacturing technologies under 7nm. The company has secured chip orders from several tech giants in the recent past. Those include Facebook, Tesla, Nvidia, and Qualcomm. Intel is also reportedly looking to source some chip production to Samsung.
No wonder the company's foundry and semiconductor divisions made up a significant part of its Q2 2020 revenue. Now, having secured chip orders from Cisco and Tesla, Samsung's foundry business looks set to grow even bigger in the coming months.
Despite reports claiming that it is facing issues related to a lower yield of 5nm chips, Samsung has flat out denied those reports. The company says chip production is going as per plan.
There's still a long way to go before it can catch up TSMC, though. The Taiwanese firm holds over 50 percent share of the contract manufacturing market. Samsung, meanwhile, holds only about 20 percent of the market.