Samsung Struggling With Multiple Economic Challenges to Compete With TSMC

According to a study that was released in Korea, Samsung Electronics chipmaking division Samsung Foundry requires additional government assistance if it is to successfully compete with the Taiwan Semiconductor Manufacturing Company (TSMC).

The analysis, which was published by the Korea Economic Research Institute, a group affiliated with a business federation, highlighted fundamental distinctions between Taiwan and South Korea, including low taxation and poor salaries, to support the claim that Samsung requires assistance to compete with TSMC.

Samsung Foundry aims to assert dominance in the semiconductor industry | Image: Business Wire

TSMC and Samsung Foundry Have a Huge Gap on the Economic Scale

The article concentrates on comparing TSMC to South Korea in order to examine the benefits that the Taiwanese business has as a result of its location. In its conclusions, it lists a number of elements that benefit TSMC, including wages for employees, tax rates, and a consistent supply of talented engineers.

The Korea Economic Research Institute contends that despite legislative efforts to lower it to 22%, the corporate tax rate in South Korea, which is 25%, would continue to be higher than the 20% that TSMC must pay in Taiwan. The research company claims that Samsung’s issues go beyond only the high tax rate and include a hostile climate for investing in R&D.

However, TSMC has additional benefits that have allowed it to succeed in its business despite the advantageous tax rates that will soon be in place. According to the study agency, the average yearly salary for TSMC employees was 95 million won, compared to 144 million won for Samsung employees. Furthermore, 10,000 semiconductor engineers were taught in Taiwan last year, compared to just 1,400 in South Korea, giving TSMC access to a robust labor base.

Samsung’s capacity to dominate the semiconductor business has been hampered as a result of such financial imbalances. A Twitter expert named Ice Universe claims that Samsung will be using TSMC’s chipset for its next S23 series due to the company’s terrible chip production technique. Since no smartphone partners are now listed among the businesses getting Samsung’s initial batches of 3nm GAA chips, the majority of them have likely switched to TSMC.

Samsung and TSMC are currently in race for gaining dominance in the market with both companies waiting on orders from the industry. Large order volumes enable businesses to swiftly recoup their expenditures and transform their investments into profits since manufacturing chips is an expensive process.

 

Muhammad Zuhair
Passionate about technology and gaming content, Zuhair focuses on analysing information and then presenting it to the audience.