Intel announces its determination to surpass Samsung in semiconductors

U.S. semiconductor manufacturer Intel announced on Wednesday that it will become the second largest player in the foundry market by 2030. Although it did not specify the name of its competition, the target was, in effect, placed on Samsung, currently ranking second. It detailed its plan to work with Microsoft and seek to mass-produce 1.8nm chips by late this year – at a faster pace than Samsung and Taiwanese firm TSMC planning to manufacture 2nm chips in large quantities next year. It also set the same target of making ultrafine 1.4nm chips as Samsung and TSMC by 2027.

The first foundry event held by Intel on Wednesday provided a venue for the company to declare war on Asian competitors that have the market under control. In particular, it is determined to take hold of half the world’s semiconductor manufacturing market, where Asian players hold 80 percent today. Its ambitious blueprint was backed up by not only the U.S. Commerce Secretary Gina Raimondo, who signaled another U.S. chip act, but also MS, OpenAI, and other U.S. AI business leaders. During the event, guests and participants made supportive comments that chips will replace oil in the future, and Intel is the champion of the United States rebuilding U.S. supply networks.

Despite Intel’s big dreams, experts doubt that it will take the lead briefly as this latecomer only reentered the foundry market in March 2021. In the past, it struggled with 7-nm chip production. As of now, it just takes up 1 percent or so in the foundry market. Having said that, it is never negligible given the power of Intel, which once ruled over the semiconductor industry during its golden years, and the all-out support of the U.S. government and businesses.

Intel’s moves have caught South Korean semiconductor manufacturers off guard. They can suffer the double burden of dealing with a lack of momentum in memory semiconductors, their main market, and surviving in competition against TSMC and Intel. Unlike Intel with the U.S. government on its side, Samsung will likely face challenges down the road. Although it is speculated that the former will be granted 13 trillion won in subsidy by Washington, details of subsidy programs on the latter’s U.S. investment plan are still up in the air. Added to this, Samsung gets insignificant tax credits on domestic investment due to South Korea’s higher corporate tax and minimum tax compared to other competing countries.

The global semiconductor market is heating up to get the upper hand in AI semiconductor technology, a market expected to grow rapidly. With OpenAI in the lead to make aggressive investments, various efforts are being made across the industry to reduce dependence on NVIDIA. Nevertheless, a crisis can bring new opportunities to Samsung Electronics and other South Korean semiconductor firms. After all, the only way to make it is to secure super-gap technology. On the government’s end, massive investments and thoughtful diplomatic and industry-wise policy grams must be in place.