Samsung Electronics said on Thursday it has begun mass producing chips with advanced 3-nanometre technology, the first to do so globally, as it seeks new clients to catch far bigger rival TSMC in contract chip manufacturing.
Compared with current 5-nanometre chips, the newly developed first-generation 3 nm process can reduce power consumption by up to 45 per cent.
Performance can improve by 23 per cent, while the surface area is 16 per cent smaller, Samsung said.
The South Korean firm did not name clients for its latest foundry technology, which supplies made-to-order chips like mobile processors and high-performance computing chips.
However, analysts said Samsung itself and Chinese companies are expected to be among the initial customers.
Fabless chip designers such as Apple and Qualcomm use Taiwan Semiconductor Manufacturing Company (TSMC) is the world's most advanced foundry chipmaker and controls about 54 per cent of the global market for contract production of chips.
Samsung, a distant second with a 16.3 per cent market share, according to data provider TrendForce, announced a 171 trillion won (NZ$211.5 billion) investment plan last year to overtake TSMC as the world's top logic chipmaker by 2030.
"We will continue active innovation in competitive technology development," said Siyoung Choi, head of foundry business at Samsung.
Samsung co-chief executive Kyung Kye-hyun said earlier this year its foundry business would look for new clients in China, where it expects high market growth as companies from automakers to appliance goods manufacturers rush to secure capacity to address persistent global chip shortages.
While Samsung is the first to production with 3-nanometre chip production, TSMC is planning 2-nanometre volume production in 2025.
Samsung is the market leader in memory chips but it had been outspent almost four-fold by frontrunner TSMC in the more diverse foundry business, making it difficult to compete, analysts said.
"Non-memory is different, there's too much variety," said Kim Yang-jae, analyst at Daol Investment & Securities.
"There are only two kinds of memory chips - DRAM and NAND Flash.
You can concentrate on one thing, raise efficiency and make a lot of it, but you can't do that with a thousand different non-memory chips," Kim said.
Samsung's efforts to compete with the industry leader have also been hampered by less-than-expected yields of older chip wafers during the past year or so, analysts said.
The company said in March that its operations have shown a gradual improvement.