Samsung aims to triple production for most advanced chips by 2027

Samsung said on Tuesday it aims to make some of the most advanced semiconductors in the world in five years, as the race between the South Korean electronics giant and the world̵[ads1]7;s biggest chipmaker TSMC heats up.

The company released a roadmap for its chip manufacturing plans, saying it will start making chips with a 2-nanometer process in 2025 and a 1.4-nanometer process in 2027.

The nanometer number refers to the size of each individual transistor on a chip. The smaller the transistor, the more of them can be packed on a single semiconductor. Generally, a reduction in nanometer size can result in stronger and more efficient chips.

In comparison, the processor in Apple’s latest iPhone 14 Pro and Pro Max models is a 4 nanometer chip.

Samsung started producing 3 nanometer chips earlier this year.

Shares of South Korea’s Samsung closed nearly 4% higher on Tuesday.

The South Korean firm, known for consumer electronics and memory chips, is looking to boost its contract chip manufacturing, or foundry, business in a bid to catch up with Taiwan’s TSMC.

Samsung is the second largest foundry globally by revenue, with a market share of 17.3% compared to TSMC’s 52.9%, according to TrendForce.

TSMC, for its part, expects to begin 3nm chip production this year with production of 2nm set to begin in 2025. However, the company has not officially announced plans to mass produce 1.4nm chips.

“This is the first time the SEC (Samsung Electronics) is guiding for its long-term foundry roadmap, and I think it’s more aggressive than TSMC and market expectations,” Daiwa Capital Markets analyst SK Kim told CNBC.

Samsung’s ambitious plans come amid global economic headwinds and signs of a slowdown in demand for semiconductors. Global chip industry sales fell 3.4% in August compared with July, according to the US-based Semiconductor Industry Association.

Despite this, Samsung said it plans to expand production capacity for its most advanced chips by more than three times by 2027 compared to this year, highlighting its bullishness on future demand.

These include the factories in the United States. Samsung has a factory in Austin, Texas, and is currently building a $17 billion facility in Taylor, Texas.

Washington has been looking to attract chip makers such as Samsung and TSMC to set up factories in the US so they can reduce their reliance on manufacturing hubs in Taiwan and South Korea.

While Samsung has put a big focus on cutting-edge chips, the company also said that semiconductors for high-performance computing, automotive and 5G use will make up more than 50% of its foundry business by 2027. These are typically less advanced chips.