In the context of increasingly fierce competition in the global semiconductor industry, the foundry selection of Qualcomm Snapdragon 8 Extreme Edition chips has attracted widespread attention. In 2024, Qualcomm announced that it would hand over all foundry orders for the second-generation Snapdragon 8 Ultra chip to TSMC, instead of the previously planned dual-foundry strategy of Samsung and TSMC. This decision not only highlights TSMC's technological advantages in the 3nm process, but also reflects the profound changes in the chip foundry industry in terms of technology maturity, supply chain stability and market structure.
TSMC's technology leadership: 3nm process has become the winner of the competition
TSMC was able to win the order for Qualcomm Snapdragon 8 Ultra, first of all, thanks to its significant technical advantages in the 3nm process. According to TSMC's financial report for the third quarter of 2024, its 3nm process (N3P) has entered the stage of large-scale mass production, and the yield rate and production efficiency have been greatly improved. In comparison, Samsung's 3nm process yield rate is only between 10% and 20%, a gap that has led Qualcomm to have doubts about Samsung's production capacity. Through its excellent technology accumulation and continuous optimization, TSMC has significantly ahead of Samsung in terms of yield rate, and has won the trust of Qualcomm.
Further, TSMC's N3P process has not only made a breakthrough in yield, but also far surpassed its peers in terms of performance and energy efficiency. TSMC's 3nm process has enabled the Snapdragon 8 Ultra chip to be significantly improved in a number of metrics: CPU performance increased by 44%, GPU performance increased by 40%, and overall energy efficiency increased by 45%, and power consumption was reduced by 40%. These data show that TSMC not only has an advantage in mass production capacity, but also can provide strong support in chip design performance optimization and energy efficiency management.
Pictured: TSMC won the order for Qualcomm Snapdragon 8 Extreme Edition
Supply chain stability: TSMC has significant advantages in its global layout
Another key factor in Qualcomm's choice of TSMC was the stability of its supply chain. TSMC's global production footprint and efficient supply chain management enable it to respond to geopolitical risks, natural disasters, and other uncertainties. TSMC's diversified production bases in Taiwan, the United States, Europe and other places ensure that it can diversify risks and maintain production continuity and stability in the face of global supply chain crises.
In contrast, Samsung's production base is relatively concentrated, especially in South Korea and the United States, which makes it less resilient to risks on a global scale. Especially in the case of large fluctuations in yield rate, it is difficult for Samsung to stably meet Qualcomm's requirements for large-scale production. Therefore, TSMC has improved the flexibility and responsiveness of the supply chain through its global layout and advanced information technology, further consolidating its leading position in the global chip foundry market.
TSMC's supply chain management system not only realizes the optimal allocation of global production resources, but also improves operational efficiency with the help of digital transformation. Through big data analysis and artificial intelligence technology, TSMC is able to monitor all aspects of the supply chain in real time, accurately predict demand fluctuations, ensure on-time delivery, and effectively reduce supply chain costs.
Market share: TSMC's oligopoly position
In the global chip foundry market, TSMC has firmly occupied an oligopoly position. According to market research firm TrendForce, in the second quarter of 2024, TSMC's market share was as high as 62.3%, far exceeding Samsung's 11.5%. This market structure gives TSMC a greater voice and bargaining power in negotiations with Qualcomm, and also consolidates its technological advantages in the high-end foundry market.
In addition, TSMC's customer structure is diverse and stable, covering the world's top chip design companies such as Apple, NVIDIA, and AMD. In contrast, Samsung's customer base is mainly concentrated in its own business and a few partners, and it is unable to achieve effective risk diversification in the face of market volatility like TSMC. TSMC's strong market share and stable customer base allow it to continue to maintain a competitive edge in the chip foundry space.
Samsung's challenges and future developments
Samsung's failure to obtain the Qualcomm Snapdragon 8 Extreme Edition chip foundry order is undoubtedly a major blow to its chip foundry business. Despite this, Samsung has not given up on its efforts to catch up with TSMC. According to Samsung's plan, it will start production of 2nm and 3nm processes in Taylor, Texas, by 2026, and plans to use gate-surround (GAA) technology to further improve transistor performance and yield.
However, Samsung still faces many challenges in regaining its competitive edge in the foundry market. First, its 3nm process has a low yield rate, which limits its ability to be produced in large quantities. Secondly, Samsung needs to strengthen its supply chain management, customer trust and global production layout. To meet these challenges, Samsung must continue to invest heavily in technology research and development, production management, and market expansion.
Industry Trends: Technology and Supply Chain Drivers
Qualcomm finally handed over all the foundry orders for the Snapdragon 8 Extreme Edition chip to TSMC, reflecting the development trend of the chip foundry industry. With the vigorous development of emerging technologies such as 5G, artificial intelligence, and the Internet of Things, the maturity and stability of the technology will become the core elements of foundry competition. Supply chain management capabilities will become more and more important, and enterprises need to remain highly sensitive and flexible in terms of global layout and risk management.
Qualcomm's choice also provides an important reference for other chip design companies. The technical capabilities, cost advantages and supply chain stability of foundries largely determine whether enterprises can stand out in the fierce market competition. In this regard, TSMC has won the trust of customers with its technological innovation, global presence and efficient supply chain management, while Samsung still needs to improve in these areas.
Conclusion
Qualcomm's OEM order for the Snapdragon 8 Ultra chip was handed over to TSMC, which was the result of a combination of factors. With its maturity in the 3nm process, strong supply chain management system and global layout advantages, TSMC successfully defeated Samsung and won the trust of Qualcomm. This decision highlights the decisive role of technical capabilities, supply chain stability, and market share in the foundry industry. Although Samsung has made some technological breakthroughs, its shortcomings in yield, supply chain management, and customer trust have caused it to miss this important opportunity.
As technology continues to advance, TSMC and Samsung will continue to compete fiercely in the global semiconductor foundry market. Qualcomm's choice undoubtedly provides valuable experience for the entire industry, especially when choosing an OEM partner, technology, cost, supply chain stability and other factors need to be comprehensively considered. In the future competition, it is possible to stand out in the fierce market competition by providing foundry partners who can provide stable, efficient and global vision.
