Qualcomm's Stock Tumbles Amid Strategic Foundry Shift to TSMC

On March 28, Qualcomm's (QCOM) stock experienced significant movement, with a single-day decline of 3.32%, marking a continuous three-day drop and an overall decrease of 4.64% over this period. This trend has garnered widespread attention, prompting investors to delve into the underlying causes and potential impacts.

Qualcomm is reportedly gearing up to launch a new 4nm high-end chipset, expected to be called Snapdragon 8s Gen 4. Although positioned below the flagship Snapdragon 8 Elite, this new chipset's performance remains highly anticipated in the market. The company appears to be leaning towards partnering with Taiwan Semiconductor Manufacturing Company (TSMC) for production, rather than opting for Samsung's foundry services, a decision that has sparked discussion within the industry.

Technology reports indicate that while Samsung's 4nm process has been tested and market-validated, suggesting it might attract orders, Qualcomm still holds reservations about the South Korean giant. Ultimately, Qualcomm's decision to award TSMC the exclusive contract for this new chip underscores concerns about Samsung's competitive stance in the semiconductor market, particularly in light of challenges faced with their 3nm process that have affected client confidence.

In 2021, Samsung used its initial 4nm technology to mass-produce chips such as the Exynos 2200, Google's Tensor chips, and Qualcomm's Snapdragon 8 Gen 1 and 5G modems. However, Qualcomm's strategic choice to collaborate with TSMC highlights the importance of trust in the wafer foundry sector as a pivotal factor in determining partnerships.

Despite Samsung's ongoing improvements to its 4nm process and claims in 2023 that they have matched TSMC's yield levels, major clients appear to favor the stability and reliability offered by TSMC, opting for established trust over taking risks with Samsung. This scenario reflects that amid constant technological advancements, the demand for dependable foundry partners remains high, with trust playing a crucial role in business collaborations.

For investors, Qualcomm's stock fluctuation offers an opportunity to review the company's strategic and technological development directions. In the competitive semiconductor realm, keeping a close watch on the company's strategies in technological upgrades and market collaborations, particularly in foundry partner selections, is vital. Furthermore, given the anticipation surrounding new product releases and potential profit increases, investors could consider carefully planning long-term investments during stock price adjustments.