Samsung's 3nm GAA Mass Production Hampered, Yield Below 50%

According to a July 27 report by South Korean media outlet The Elec, Samsung Electronics' 3nm GAA (Gate-All-Around) process faces severe yield issues one year after mass production began, with current overall yield only about 40% to 50%, far below the 70% threshold required for commercial mass production. Sources revealed that Samsung has postponed the mass production schedule for the next-generation 3nm enhanced version (3GAP) to the first half of 2027.

Samsung was the first to mass produce 3nm GAA technology globally in 2022, but its complex manufacturing process has led to persistently high defect rates. In contrast, TSMC uses mature FinFET technology, with 3nm yield exceeding 85%. This has prompted major AI chip customers such as Qualcomm and NVIDIA to reassess order allocation.

AI Chip Demand Explodes, TSMC Capacity Tight

As generative AI model parameter scales grow exponentially, demand for advanced process chips surges. TSMC's 3nm capacity in 2026 is expected to reach 120,000 wafers per month, up 50% from 2025, but still falling short of demand. TSMC recently announced a $30 billion investment to build its third 3nm wafer fab in Arizona.

Analysts note that Samsung's yield struggles will accelerate AI chip concentration toward TSMC. Cowen semiconductor analysts stated in their latest report: 'Samsung's 3GAP delay means TSMC will be the primary choice for AI training chips for at least the next 18 months. Samsung needs to solve the fundamental problem of transistor channel control.'

EUV Lithography Efficiency Becomes Key Constraint

One root cause of Samsung's challenges is its lower EUV lithography machine production efficiency. According to the Q2 2026 earnings report released on July 27 by Dutch lithography giant ASML, Samsung's High-NA EUV equipment utilization rate is only 55%, while TSMC's similar equipment utilization rate reaches 92%.

ASML CEO Christophe Fouquet said during the earnings call: 'The technical complexity of High-NA EUV exceeds expectations, and some customers need more time to complete process integration. We are working with Samsung to optimize photoresist and mask solutions.'

Samsung's next-generation 1.4nm process, planned for mass production in 2027, will still use the GAA architecture. The company has urgently deployed 2,000 R&D personnel to tackle yield issues.

Memory Chip Market Recovery Eases Samsung's Pressure

Despite setbacks in its foundry business, Samsung performs strongly in memory chips. On July 28, Samsung reported Q2 earnings with revenue up 18% year-on-year to 86 trillion Korean won, where DRAM and NAND Flash operating profit grew 25% quarter-on-quarter, driven by AI server demand for HBM3e high-bandwidth memory.

The head of Samsung Electronics' Device Solutions division said in a conference call: 'HBM3e shipments were realized in 2026, and the fourth-generation HBM4 has begun sample delivery. The strong cash flow from the memory business will support technical breakthroughs in advanced logic foundry.'

Asian Semiconductor Landscape Reshaped: Chinese Manufacturers Follow GAA Technology

Samsung's difficulties have also attracted attention from Chinese wafer foundries. SMIC announced in early July the launch of a 3nm GAA R&D project, but industry expects mass production may come after 2029. Hua Hong Semiconductor chooses a differentiated route, focusing on mature processes for IGBT and power management chips.

The triopoly landscape of TSMC, Samsung, and Intel faces uncertainty. Intel announced in Q1 2026 a breakthrough in its 18A (1.8nm) process with yield reaching 70%, and signed Amazon AWS as its first customer. Intel CEO Pat Gelsinger said in an interview on July 27: 'We plan to surpass TSMC in 2027 to become the leader in advanced process technology.'

Conclusion: TSMC Dominant in Short Term, Long-Term Technology Path Uncertain

For investors, Samsung's 3nm yield issues further confirm TSMC's dominant position in AI chip foundry. However, in the long term, GAA technology remains the mainstream direction beyond FinFET. If Samsung eventually overcomes the yield bottleneck, it could reshape the competitive balance. It is recommended to focus on the long-term investment value of TSMC (TSM), ASML (ASML), Samsung Electronics (SSNLF), and advanced packaging equipment manufacturers.

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