TSMC reportedly rejects outsourcing proposal for Samsung’s Exynos chips
HSINCHU, TAIWAN — In a significant development for the semiconductor industry, Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly declined Samsung’s proposal to produce its Exynos chips.
The information comes from tipster @Jukanlosreve on X, who has a history of accurately reporting details about Samsung’s operations.
Update: TSMC has rejected the deal. There will be no Exynos made by TSMC. https://t.co/x5zlcPBOlp
— Jukanlosreve (@Jukanlosreve) January 15, 2025
Why TSMC rejected Samsung’s proposal
According to a report by Techzine, TSMC’s decision to reject Samsung’s proposal is driven by two key factors: safeguarding its trade secrets and managing its production capacity. While TSMC uses similar equipment to competitors like Samsung and Intel, its competitive advantage lies in its highly refined and optimized internal processes.
As Kevin Zhang, TSMC’s Deputy Co-COO, aptly stated last year, “The driver experience is just as important as the performance of the car.”
Additionally, TSMC’s production lines are already heavily booked by major clients such as Apple, Nvidia, Qualcomm, and Intel. These longstanding partnerships likely left little room for accommodating Samsung’s request, especially on cutting-edge nodes like 3nm.
Implications for Samsung’s foundry business
This rejection places additional pressure on Samsung to address persistent challenges in its foundry business. The South Korean tech giant has struggled with low yields in its advanced 3nm GAA (Gate-All-Around) process, which has hindered its ability to compete with TSMC.
Samsung’s Exynos chips have historically faced criticism for underperforming compared to Qualcomm’s Snapdragon processors. Rumors suggest that the upcoming Galaxy S25 series may exclusively feature Snapdragon chips, further sidelining Exynos in Samsung’s flagship devices.
Samsung’s next steps for Exynos development
Despite the recent setback with TSMC, Samsung remains dedicated to advancing its Exynos chip lineup. The company is reportedly focusing on developing next-generation processors, including the Exynos 2500 and 2600, while also working on a 2nm process technology aimed at powering future flagship devices.
However, without access to TSMC’s manufacturing expertise, Samsung will need to rely heavily on internal innovation and process optimization to bridge the performance and efficiency gap with competitors like Qualcomm and MediaTek.
In addition to its chip development efforts, Samsung Electronics is reportedly ramping up its outsourcing strategy for smartphone design and production. According to a report last year, the company plans to increase its reliance on Chinese original device manufacturers (ODMs) and joint device manufacturers (JDMs).
The bigger picture in semiconductor competition
TSMC’s decision underscores the delicate balance between collaboration and competition in the semiconductor industry. By refusing to manufacture chips for a direct rival like Samsung, TSMC reinforces its position as the go-to foundry for high-performance chips while safeguarding its intellectual property and operational secrets.
As the semiconductor race heats up, this development serves as a reminder of the intense competition shaping the industry’s future.
