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Why Qualcomm chooses TSMC for chip building

Both Samsung Foundry’s 3nm Gate-All-Around (GAA) process node and TSMC’s 3nm FinFET process node are showing a yield rate of 50%. Gate-All-Around (GAA) technology allows the transistor to come into contact with the channel on all four sides which reduces current leakage and delivers high drain current. While Samsung uses this technology, which features vertically-placed nanosheets, in its 3nm node, TSMC won’t include GAA until it hits 2nm.

According to the report, Qualcomm refuses to allow Samsung Foundry to build its chips until its yield rate hits 70%. The rate is the percentage of dies that pass quality control (QC) compared to all of the dies available from a silicon wafer. The issue is that the chip designer, in this case Qualcomm, still must pay up for all of the dies from a single wafer whether they pass QC or not. TSMC gave its biggest customer, Apple, a sweetheart deal and the foundry is eating the costs of any defective 3nm chips for now.

At a 50% yield, Qualcomm would have to raise the prices of its Snapdragon chips to make up for the money it would have to pay Samsung for defective chips. A 3nm process node means that the chip uses smaller transistors allowing more to fit inside. The higher a chip’s transistor count, the more energy-efficient and/or powerful the chip is. Right now, the only 3nm chip used to power a smartphone is Apple’s A17 Pro which is currently deployed on the iPhone 15 Pro and iPhone 15 Pro Max.

Samsung has delivered 3nm chips this year to a Chinese bitcoin company. But these chips were not made for smartphones and thus were easier to produce. Qualcomm used Samsung to produce the 5nm Snapdragon 8 Gen 1 application processor (AP) which was introduced in December 2021. But a yield rate as low as 35% forced Qualcomm to leave Samsung and the chip designer switched to TSMC to produce the Snapdragon 8+ Gen 1.

But if Samsung Foundry can’t get its 3nm yield rate up to 70% in time to get Qualcomm to sign on the dotted line, and some production capacity doesn’t open up in Taiwan, Qualcomm might have to make some hard decisions. It might have to turn to Samsung Foundry regardless of yield or build the Snapdragon 8 Gen 4 SoC on a 4nm process node. According to TF International analyst Ming-Chi Kuo, Qualcomm recently ruled out using Intel to build its Snapdragon chips.

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