Samsung to sell latest generation chip to IBM

Samsung Electronics will supply next-generation microprocessor chips to IBM, which will use the chips for artificial intelligence (AI) computing and cloud system applications, both companies said Friday.

The product Samsung will manufacture for IBM is a seven-nanometer processor made by extreme ultraviolet (EUV) lithography technology. The seven-nanometers in the name refers to the width of the circuit through which electricity flows on the semiconductor. The dominant product until recently has been rated 10-nanometer.

Narrower circuits ensure faster data processing speeds, less electricity consumption and higher area efficiency, with more transistors printed on a given amount of silicon, the base material for semiconductors.

IBM said in a press release that the strategic partnership will position the two companies to lead “the new era of high-performance computing specifically designed for AI.”

“IBM selected Samsung to build our next generation of microprocessors because they share our level of commitment to the performance, reliability, security and innovation that will position our clients for continued success on the next generation of IBM hardware,” said John Acocella, vice president of Enterprise Systems and Technology Development for IBM Systems.

The U.S. company and Samsung have been research and development partners for 15 years.

For Samsung, the deal is a significant milestone for its foundry business, which is to manufacture semiconductors for external clients that do not have chip fabrication facilities.

The company is already a leader in DRAM and NAND memory chips, but it is now focusing on the fast-growing foundry market. IHS Markit estimates that the subsector will grow an average of 7.8 percent a year until 2021-which is faster than 5.3 percent expected for DRAMs and 6.1 percent for NANDs.

Samsung is currently ranked global No. 4 among foundries, with a market share of less than 10 percent. As it works to climbing up the rankings, a client like IBM helps establish momentum for future deals.

In February, Samsung signed a foundry deal with Qualcomm to supply seven-nanometer processors for 5G mobile devices. The company hopes the seven-nanometer processor chip will help as it works to expand its market share. It is currently one of two foundries known to manufacture the product. The other is Taiwan Semiconductor Manufacturing Company, the No. 1 semiconductor foundry with more than 50 percent market share.

Samsung’s EUV lithography technology was developed earlier this year to mass produce seven-nanometer semiconductors, as the conventional way of printing circuits on 10-nano chips were not sophisticated enough to print thinner circuits.

A new facility specializing in EUV lithography is under construction at Hwaseong, Gyeonggi, and is due for completion by the second half of next year. Samsung also revealed in May that it plans for the mass production of three-nanometer processors by 2020.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]