Samsung Faces Setbacks in Semiconductor Business Amid Ongoing Yield Issues

Samsung has been trying hard to recover its lost semiconductor business. However, the company is facing multiple setbacks as it is unable to secure large orders from key clients. Poor 3nm yield rates have hurt the Korean behemoth badly. While there are hopes that Samsung would bounce back in the 2nm era, industry analysts expect the situation to get worse.

Samsung fails to gain a foothold in the 3nm semiconductor era due to a poor yield

While Samsung Foundry is getting orders from big tech giants such as AMD and Qualcomm, most of them are for legacy nodes (4nm or older). Industry leader TSMC has taken away all major orders for cutting-edge processes. As a result, the gap between the two companies has widened, with a revenue difference of over 10 trillion won in Q1 2025.

Samsung got multiple opportunities to secure clients due to TSMC’s lack of capacity. However, the Korean firm failed to take advantage of them because of its unstable 3nm yield. According to the Korean outlet DealSite, customers are entrusting most of the total quantity to TSMC in the advanced process, while distributing small quantities to Samsung. In terms of quantity, the ratio between TSMC and Samsung is about 95:5.

The report further said that the 5% quantity allocated to Samsung is now being transferred back to TSMC due to yield issues. For instance, Google recently withdrew plans to produce its next-generation Tensor G5 chip using Samsung’s 3nm process and instead chose to use TSMC’s process.

Worse yet, Samsung is struggling to improve its 2nm yields. The report says the yield is still in the high teens, much lower than the recommended minimum of 60% for mass production. If the company proceeds with the mass production, the operating profit margin could reach minus 50%. Therefore, it may take longer to commercialize, though Samsung plans to mass-produce in the second half of the year.

Major customers, including Apple, Nvidia, and AMD, are already in talks with TSMC for the 2nm node. It will be interesting to see whether Samsung can bounce back in the semiconductor race during the 2nm era with an improved yield or if TSMC runs away with the whole market again.