Samsung is facing significant challenges with the yield of its 2nm chip production, leading to personnel reductions at its $17 billion plant in Taylor, Texas, which was meant to spearhead advanced manufacturing below 4nm. Originally slated for mass production in late 2024, this timeline has been pushed back to 2026 due to ongoing yield issues, with current rates for processes below 3nm sitting below 50 percent. Samsung's Gate-All-Around (GAA) technology reportedly has a yield as low as 10 to 20 percent, well behind competitor TSMC, whose advanced process yields are around 60 to 70 percent.
With TSMC commanding a dominant market share of 62.3%, Samsung's share has dwindled to just 11.5%. Recent production trials at TSMC's Arizona facility have already yielded results comparable to its main plants in Taiwan, with the first fab set to begin operations in the first half of 2025 and a second fab using 2nm technology scheduled for 2028. In response to its declining competitiveness, Samsung is reevaluating its strategies and has maintained only a skeleton crew at its Taylor facility.
Samsung has a tentative agreement with the U.S. government for nearly $7 billion in subsidies under the CHIPS Act, but this funding is now in jeopardy due to delays in operationalizing the plant. Despite Chairman Lee Jae-yong’s efforts to seek solutions from key equipment suppliers like ASML and Zeiss, Samsung has struggled to resolve its production issues. A semiconductor professor cited factors such as pervasive bureaucracy, slow decision-making, and inadequate compensation as underlying reasons for Samsung's reduced competitiveness.
Once a leader in semiconductor manufacturing, Samsung became the first foundry to achieve volume production of 3nm chips in 2022, surpassing both TSMC and Intel at that time. However, its ambitious plans to maintain a technological edge with 2nm transistors now seem increasingly unattainable.
