Samsung’s Chipmaking Ambitions Hit a Snag
The tech giant’s plans to expand into contract chip manufacturing have hit a roadblock. Samsung Electronics has delayed taking delivery of crucial chipmaking equipment from ASML for its upcoming factory in Texas, citing a lack of major customers for the project.
A Fresh Setback for the Taylor Project
This latest development is a significant blow to Samsung’s chairman, Jay Y. Lee, who has been pushing to diversify the company’s business beyond memory chips. The delay in equipment deliveries underscores the growing gap between Samsung and its rivals, TSMC and SK Hynix, which are ramping up production of high-end chips to meet booming demand from artificial intelligence applications.
ASML’s Sales Forecast Takes a Hit
ASML, the world’s largest chipmaking equipment supplier, has cut its 2025 sales forecast, citing weakness in markets other than AI. The Dutch company did not name the clients who have delayed their fab projects, but Reuters has learned that Samsung is one of them.
The Delayed Deliveries
Two sources familiar with the matter revealed that the delayed shipments to Samsung’s Taylor factory involve ASML’s advanced chipmaking equipment, including extreme ultraviolet (EUV) lithography machines. These machines, which cost around $200 million each, are essential for manufacturing advanced chips used in smartphones, electronic devices, and AI servers.
A Challenging Timetable
Samsung had initially planned to start production at the Taylor plant in 2024, but pushed it back to 2026. Analysts warn that even this revised timetable may be challenging to meet, given the lack of new volume clients. “Without new volume clients, even the 2026 timetable looks challenging… We see a possibility of a further delay and an asset write-off,” Macquarie analysts said in a recent report.
Widening the Gap with TSMC
Samsung’s struggles in the foundry business have led to a significant erosion of its market share. According to data from Statista, Samsung’s market share in contract manufacturing dropped 8 percentage points in the last five years to 11%, while TSMC’s market share rose to 61.7% over the same period.
Technological Challenges Ahead
Analysts say Samsung faces significant technological challenges in mastering advanced chip manufacturing to lure top clients like Apple and Nvidia away from TSMC. The company’s struggles in its foundry business have also impacted its factories in South Korea, where it is grappling with low production yields of its most advanced 3-nanometer chips.
A Slowing Capacity Expansion
Reflecting Samsung’s slowing capacity expansion, ASML reported that sales to South Korea – home to Samsung and its smaller rival SK Hynix – shrunk by one-third in the third quarter. This slowdown has significant implications for Samsung’s future growth prospects in the chipmaking industry.
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