Analyst see Samsung busting TSMC monopoly in foundry market

Semiconductor analysts believe Samsung has broken the monopoly in the cutting-edge foundry market thanks to the successful ramp of its 14nm process, which is believed to have yield rates exceeding the 70 percent mark. Analyst Mehdi Hosseini with Susquehanna International Group claims Samsung is now effectively as good as TSMC at 14nm while offering a much lower cost per wafer to clients, which means TSMC is likely to lose pricing power this year in its most profitable technology nodes.

BNP Paribas analyst Szeho Ng adds that TSMC is now anxious to ramp 16nm faster than expected and move to 10nm as fast as possible to regain its tech lead, but that node isn't expected to generate sales until late 2016.

TSMC, the world’s largest chip foundry, is likely to lose pricing power this year in its most profitable technology nodes ranging from 28nm to 16nm as key customers including Qualcomm, MediaTek, Apple, Nvidia and Marvel shift to Samsung and other TSMC competitors as second sources, the analysts said after TSMC posted its first-quarter 2015 financial results on April 16.

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Moreover, Samsung has gained bargaining power with Qualcomm, MediaTek and Marvel, all of which are negotiating to win sockets in a new lineup of Samsung mobile phones slated for launch in 2016, according to Hosseini. Samsung has more incentive to use its foundry business as a bargaining chip to exchange foundry business for mobile design wins, he said.