Samsung's Foundry Unit Trails TSMC Despite Mass Production of 2nm Process

Samsung's foundry unit is facing significant challenges in closing the gap with industry leader TSMC. Despite the mass production of its 2nm process, Samsung's yields are still below the threshold needed for profitable high-volume output.

## The Struggle to Close the Gap

Samsung's foundry unit is divided across two countries and four campuses, with a roadmap that runs from the Korean bases at Pyeongtaek, Hwaseong, and Giheung to the new U.S. site at Taylor. The company began mass-producing its first-gen 2nm process in 2025, but none of it has closed the gap with TSMC. In fact, Samsung's foundry unit still trails TSMC roughly 11:1 by revenue.

| Revenue Ratio | TSMC | Samsung | | --- | --- | --- | | | 1 | 11 |

The issue lies in yields, with Samsung's 2nm yields reported to be sitting near 55%, below the threshold the business needs to run advanced nodes at a profit. This has led to Samsung absorbing the cost of the gap, which has been possible due to its foundry unit sitting inside the Device Solutions division alongside a memory business posting record profits.

## The Taylor Project

Samsung's Taylor project is the centerpiece of its roadmap and the company's longest-running headache. The full campus, covering two fabs, an advanced packaging facility, and an R&D center, has been reported at around $44 billion, with the portion tied to U.S. funding set at over $37 billion. The project has been plagued by construction stalls, with reporting attributing the halt to an absence of committed customers and yield problems on the node the fab was meant to run.

| Investment | Taylor Project | U.S. Funding | | --- | --- | --- | | | $44 billion | $37 billion |

The site is now set to install a third-gen SF2P+ variant of its 2nm process, with trial production targeted by the end of 2026, full mass production in 2027, and a capacity goal of around 50,000 wafer starts per month. The facility's anchor tenant is Tesla, whose AI6 chip Samsung will build at Taylor under the eight-year deal running through 2033.

## The Road Ahead

Samsung's roadmaps live and die by their yields, and the company's first-gen 2nm yields were reported as climbing through 2025, but as of April, they still sat near 55%. To compensate, Samsung has been pulling back aggressively on price to stay competitive, cutting its 2nm wafer price to around $20,000, undercutting TSMC by roughly 33%. However, undercutting on price while trailing on yield is a difficult combination to fund, which is why the unit's losses have set the pace of its recovery.

| Wafer Price | Samsung | TSMC | | --- | --- | --- | | | $20,000 | $30,000 |

The company's anchor customer on 2nm is its own mobile chip unit, with the Exynos 2600, built on SF2, being the node's first commercial product. However, the Galaxy S26 Ultra runs Qualcomm's Snapdragon SoCs worldwide, and the Exynos reportedly covers only around a quarter to a third of S26 builds because yields cap how many it can supply.

A successor, the Exynos 2700 on SF2P, is in development for the Galaxy S27, with mass production targeted for the second half of this year. Externally, 2nm customers remain thin, with the clearest to date being Japanese AI firm Preferred Networks, which Samsung confirmed as a turnkey customer for SF2 plus 2.5D packaging on AI accelerators.

## Conclusion

Samsung's foundry unit is still facing significant challenges in closing the gap with TSMC, despite the mass production of its 2nm process. The company's yields are below the threshold needed for profitable high-volume output, and it has been forced to absorb the cost of the gap. However, Samsung's integrated model has shown promise in memory, with the company shipping the industry's first commercial HBM4 in February this year. The road ahead will be challenging, but Samsung's ability to adapt and innovate will be crucial in determining its success in the foundry market.