Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

[Daniel Nenni]

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(Photo credit: Samsung)

Samsung’s foundry business faces ongoing losses and strategic uncertainty. A report from Business Korea reveals that Samsung Securities, a subsidiary of the group, issued a report in July titled “Geopolitical Shifts and Industry,” recommending that Samsung spin off its foundry division and list it in the U.S.

In the second half of this year, Samsung ramped up production of its Gate-All-Around (GAA) 3nm second-generation process, but unstable yields have failed to attract clients.

According to TrendForce, TSMC held 62.3% of the global foundry market in Q2, while Samsung captured just 11.5%. Major tech players like Nvidia and Apple have partnered with TSMC, leaving Samsung struggling to secure similarly high-profile contracts.

Business Korea reports that Samsung will hold its Foundry Forum online on October 24, highlighting the challenges its foundry division is facing. Around mid-October, the company is also expected to announce its third-quarter results, with analysts cited by Business Korea predicting a 500 billion won ($385 million) loss in the non-memory segment, which includes the foundry and system LSI businesses.

Adding to the woes, the Exynos 2500 chip, produced with the GAA 3nm process, is yielding poorly, casting doubt on its inclusion in next year’s Galaxy S25. Delays in the 2nm process further complicate Samsung’s roadmap.

Rumors are circulating about a potential reallocation of foundry personnel to the memory division. Externally, there are calls for Samsung to spin off the foundry business. Samsung Securities advocates for strategic shifts, suggesting further U.S. expansion and the potential spinoff and U.S. listing of the foundry division.

In fact, the suggestion for Samsung to spin off its foundry business has been driven by Intel’s recent decisions. On September 16th, Intel announced that it would transform its foundry division into a wholly-owned subsidiary with its own board of directors.

Meanwhile, Intel also signed a multi-billion-dollar, multi-year deal with Amazon to manufacture chips for Amazon Web Services’ (AWS) AI data centers.

[News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing | TrendForce News

Samsung’s foundry business faces ongoing losses and strategic uncertainty. A report from Business Korea reveals that Samsung Securities, a subsidiary ...

www.trendforce.com

 

[Daniel Nenni]

Samsung may have had 11% market share but I can assure that is dropping fast and what percentage of that is internal Samsung business?

If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC.

I see no reason for Samsung to spin off their foundry business. It is nothing without the Samsung Semiconductor mothership.

Samsung's Foundry Operations Struggle with Unstable Yields and Client Losses

Samsung Electronics' foundry business is facing a challenging period, marked by consecutive losses and strategic uncertainties. In July, Samsung Securities, a

www.businesskorea.co.kr

 

[hist78]

Samsung may have had 11% market share but I can assure that is dropping fast and what percentage of that is internal Samsung business?

If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC.

I see no reason for Samsung to spin off their foundry business. It is nothing without the Samsung Semiconductor mothership.

Samsung's Foundry Operations Struggle with Unstable Yields and Client Losses

Samsung Electronics' foundry business is facing a challenging period, marked by consecutive losses and strategic uncertainties. In July, Samsung Securities, a

www.businesskorea.co.kr

With so many technical difficulties at the leading edge nodes, do we know what Samsung plans to do with its Taylor Texas fab?

 

[hist78]

Samsung may have had 11% market share but I can assure that is dropping fast and what percentage of that is internal Samsung business?

If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC.

I see no reason for Samsung to spin off their foundry business. It is nothing without the Samsung Semiconductor mothership.

Samsung's Foundry Operations Struggle with Unstable Yields and Client Losses

Samsung Electronics' foundry business is facing a challenging period, marked by consecutive losses and strategic uncertainties. In July, Samsung Securities, a

www.businesskorea.co.kr

"If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC."

It's very hard for Intel to do that because its IDM business model and mentality are dragging it down.

 

[Daniel Nenni]

"If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC."

It's very hard for Intel to do that because its IDM business model and mentality are dragging it down.

I guess you could say that about Samsung as well, or the memory business model and mentality. The funny thing is, IDMs started the whole fabless thing in the first place.

 

[Artificer60]

"If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC."

It's very hard for Intel to do that because its IDM business model and mentality are dragging it down.

All good things take time. I've seen several indications in the media that Intel is trying to change the IDM mentality and some of their clients have been pleased with the improvement they are seeing. Now how long it will take to get there and whether or not Intel has enough time are a different question. But I believe they are aware of their shortcomings and are actively working to address them.

 

[Barnsley]

Hopefully Samsung pull their finger out!

Living on the edge with a few of our major customers apparently teetering on the brink of disaster!!

 

[siliconbruh999]

All good things take time. I've seen several indications in the media that Intel is trying to change the IDM mentality and some of their clients have been pleased with the improvement they are seeing. Now how long it will take to get there and whether or not Intel has enough time are a different question. But I believe they are aware of their shortcomings and are actively working to address them.

Better than not doing anything like they have done in 2011-2018 i guess we got 4 core CPU as a consumer

 

[milesgehm]

Samsung could sell their foundry business to GF

 

[Daniel Nenni]

Samsung could sell their foundry business to GF

I always thought Samsung should buy GF. GF used the Samsung 14nm recipe. GF would be a much better face for the Samsung Foundry business.

 

[Artificer60]

If I were Intel Foundry I would position as the #1 IDM foundry and wipe out Samsung Foundry in the NOT TSMC market. Once established, then you can try and go head-head with TSMC.

I'm curious as to how you would see this as different from what Intel is currently doing? I can't see any advantage for IF in turning away any potential customer. Are you suggesting a focus to win specific customers?

 

[Daniel Nenni]

I'm curious as to how you would see this as different from what Intel is currently doing? I can't see any advantage for IF in turning away any potential customer. Are you suggesting a focus to win specific customers?

Intel Foundry is positioning themselves as a TSMC competitor, as a technology leader, 5 nodes in 4 years right? Unfortunately, foundry customers have already voted at 3nm and 2nm with TSMC winning 90%+ market share including Intel themselves. Do you really think that is going to change? Why should Intel fight a losing battle? Do you think investors will accept continued losses? Pat Gelsinger is literally mortgaging the company on this strategy and it is not working. GlobalFoundries tried to do the same thing with oil money and thankfully they pivoted and now run a profitable business in the NOT TSMC market. Intel needs to do the same, pivot or die. I lost count how many times Nvidia pivoted over the last 30 years. I also lost count of how many companies in Silicon Valley did not pivot and are out of business. I do not want Intel to be one of those companies.

What would you suggest they do? Stay the course or pivot?

 

[kevin01]

Intel Foundry is positioning themselves as a TSMC competitor, as a technology leader, 5 nodes in 4 years right? Unfortunately, foundry customers have already voted at 3nm and 2nm with TSMC winning 90%+ market share including Intel themselves. Do you really think that is going to change? Why should Intel fight a losing battle? Do you think investors will accept continued losses? Pat Gelsinger is literally mortgaging the company on this strategy and it is not working. GlobalFoundries tried to do the same thing with oil money and thankfully they pivoted and now run a profitable business in the NOT TSMC market. Intel needs to do the same, pivot or die. I lost count how many times Nvidia pivoted over the last 30 years. I also lost count of how many companies in Silicon Valley did not pivot and are out of business. I do not want Intel to be one of those companies.

What would you suggest they do? Stay the course or pivot?

So what exactly is "not tsmc" market? Is that 14nm and higher? Sorry, it is already crowded, with Chinese rushing in, and TSMC planning to cut prices as a response. See https://x.com/dnystedt/status/1841333513209155720

IMO, TSMC is in all nodes, there is no "not tsmc" market. You either compete against TSMC in the leading edge, commanding high prices; or compete against TSMC and 10 other foundries in mature processes, barely making some profits.

Global foundry is a $20B company, I don't think Intel investors are so excited that Intel could become another global foundry.

 

[Daniel Nenni]

So what exactly is "not tsmc" market? Is that 14nm and higher? Sorry, it is already crowded, with Chinese rushing in, and TSMC planning to cut prices as a response. See https://x.com/dnystedt/status/1841333513209155720

IMO, TSMC is in all nodes, there is no "not tsmc" market. You either compete against TSMC in the leading edge, commanding high prices; or compete against TSMC and 10 other foundries in mature processes, barely making some profits.

Global foundry is a $20B company, I don't think Intel investors are so excited that Intel could become another global foundry.

The NOT TSMC market is companies that want a second source (my definition). This included Qualcomm, Nvidia, Google, and a few other whales who used Samsung. The foundry business is very price sensitive and inherently multi source for that reason. Samsung sells wafers on price and we are talking double digit discounts from TSMC pricing.

Apple went exclusive with TSMC after using Samsung from 90nm down to 28nm. The Apple TSMC relationship started at 20nm and is what made TSMC the dominant foundry we see today, my opinion. Apple wrote some very big checks, co-developed the processes, and got first access to wafers. TSMC then developed an executive flier club for customers exclusive to TSMC. It really is the difference between flying coach and flying first class.

Samsung had competitive processes at 14nm and 7nm but 5nm and 3nm were late to yield. Samsung 5nm is yielding now so they are getting business but Samsung 3nm (the first GAA process) was a complete bust. If TSMC matches Samsung prices they will not lose customers and TSMC certainly has the margins to do it. The only issue I see is the whole monopoly problem.

What I am wondering is will the top fabless semiconductor companies swing back to multi sourcing after enjoying the perks of flying first class with TSMC?

 

[siliconbruh999]

Intel Foundry is positioning themselves as a TSMC competitor, as a technology leader, 5 nodes in 4 years right? Unfortunately, foundry customers have already voted at 3nm and 2nm with TSMC winning 90%+ market share including Intel themselves. Do you really think that is going to change? Why should Intel fight a losing battle? Do you think investors will accept continued losses? Pat Gelsinger is literally mortgaging the company on this strategy and it is not working. GlobalFoundries tried to do the same thing with oil money and thankfully they pivoted and now run a profitable business in the NOT TSMC market. Intel needs to do the same, pivot or die. I lost count how many times Nvidia pivoted over the last 30 years. I also lost count of how many companies in Silicon Valley did not pivot and are out of business. I do not want Intel to be one of those companies.

What would you suggest they do? Stay the course or pivot?

I think they should find some middle ground there ain't no way they are taking backwhat they lost easily they can pivot into semi custom buisness very nicely with their foundry and their designs especially with CPU/GPUs and some of their IP they have very nice IPs they should use it as a differentiating factor and pivot accordingly they still have market share in Server/Client they should aim to strengthen it and get whale foundry customers and also invest into GPUs they have very nice SW stack should play to their strengths not want to act like a be wannabe TSMC

 

[samwilde]

IBM could move to Intel Foundry. They get a lot of US government business.

 

[Artificer60]

Intel Foundry is positioning themselves as a TSMC competitor, as a technology leader, 5 nodes in 4 years right? Unfortunately, foundry customers have already voted at 3nm and 2nm with TSMC winning 90%+ market share including Intel themselves. Do you really think that is going to change? Why should Intel fight a losing battle? Do you think investors will accept continued losses? Pat Gelsinger is literally mortgaging the company on this strategy and it is not working. GlobalFoundries tried to do the same thing with oil money and thankfully they pivoted and now run a profitable business in the NOT TSMC market. Intel needs to do the same, pivot or die. I lost count how many times Nvidia pivoted over the last 30 years. I also lost count of how many companies in Silicon Valley did not pivot and are out of business. I do not want Intel to be one of those companies.

What would you suggest they do? Stay the course or pivot?

I guess I'm just thick.

Is it your suggestion that Intel quit trying to provide leading edge processes? I don't think the NOT TSMC market as you define it is looking for trailing edge foundry service, but maybe I'm wrong. It is my impression the NOT TSMC market was looking to Samsung to provide an alternative at the leading edge. If Intel is to take their 11% of the market, don't they have to provide leading edge processes? Intel has never stated they intend to be the number 1 foundry option. I do recall them saying they were shooting for number 2 which would mean capturing most of Samsung's market. It seems to me that their goals and you suggestion are aligned.

I'm also curious if all of Intel's products + all of Samsung's foundry market would be enough to fund leading edge development. It seems to me that is really the crux of the matter.

 

[kevin01]

I guess I'm just thick.

Is it your suggestion that Intel quit trying to provide leading edge processes? I don't think the NOT TSMC market as you define it is looking for trailing edge foundry service, but maybe I'm wrong. It is my impression the NOT TSMC market was looking to Samsung to provide an alternative at the leading edge. If Intel is to take their 11% of the market, don't they have to provide leading edge processes? Intel has never stated they intend to be the number 1 foundry option. I do recall them saying they were shooting for number 2 which would mean capturing most of Samsung's market. It seems to me that their goals and you suggestion are aligned.

Very much agreed.

I'm also curious if all of Intel's products + all of Samsung's foundry market would be enough to fund leading edge development. It seems to me that is really the crux of the matter.

It should be enough. IFS's gola is to have external customers account for approximately one-third of its revenue, which should be sufficient for its biz model.

Currently, there's a widespread assumption that TSMC will maintain its technical leadership indefinitely without any significant missteps. However, how long can this assumption be held true? For instance, SemiAnalysis reports that while TSMC's backside power implementation is more advanced than IFS's PowerVia technology, it is also more complex and potentially carries higher risks. This highlights that even industry leaders can face technical challenges and uncertainties.

 

[tooLongInEDA]

Very much agreed.


It should be enough. IFS's gola is to have external customers account for approximately one-third of its revenue, which should be sufficient for its biz model.

Currently, there's a widespread assumption that TSMC will maintain its technical leadership indefinitely without any significant missteps. However, how long can this assumption be held true? For instance, SemiAnalysis reports that while TSMC's backside power implementation is more advanced than IFS's PowerVia technology, it is also more complex and potentially carries higher risks. This highlights that even industry leaders can face technical challenges and uncertainties.

That's certainly all true about the potential for missteps. But there's quite a large AND function in this. For TSMC to lose leadership requires:

( significant misstep OR miss significant new technology ) AND competitor who doesn't AND competitor who has the resources and other attributes to replace TSMC

plus perhaps some other factors I missed.

Recent form also suggests that TSMC's more collaborative working model (I asusme they work very closely with major customers in solving problems) makes TSMC less prone to the first factor than Intel. Intel is also weaker on the last point today.

Suggests to me that TSMC really have to miss some critical new technology very badly in order to throw it away from here.

Standing well back from the detail, you do wonder if Intel's best approach isn't to aim for particular market segments rather than try to immediately confront TSMC across the whole market (never attack a much larger force head on, choose your strongest ground). Which is precisely what they are doing with 18A - though it appears more by necessity/accident than design. But the critical question as @Artificer60 says is whether even a juicy high margin, high performance market segment can be big enough today.

 

[Fred Chen]

Recent form also suggests that TSMC's more collaborative working model (I asusme they work very closely with major customers in solving problems) makes TSMC less prone to the first factor than Intel. Intel is also weaker on the last point today.

Maybe this is a general problem for an IDM-based foundry like Samsung as well. A fabless customer may be wary of working with a potentially competitive IDM.