Samsung Electronics is reportedly scaling back operations at its semiconductor foundry facilities, specifically targeting its 4 nm, 5 nm, and 7 nm production lines due to weak demand. This decision comes in light of significant financial losses, estimated to be in the tens of billions of won during the third quarter of this year, as the company seeks to reduce costs and streamline operations
According to industry sources, Samsung has already shut down over 30% of its production capacity of the above mentioned process nodes on its Pyeongtaek campus, with plans to increase this to nearly 50% by the end of the year.
This move reflects a broader industry trend, particularly as lower-than-expected orders from Chinese fabless semiconductor companies have affected production volumes in the 4 and 5 nm processes.
Increased U.S. regulations on semiconductor exports to China have prompted these companies to delay projects, exacerbating the situation for Samsung’s foundry business.
Experts warn that these shutdowns could weaken Samsung’s competitive position in the semiconductor market. As Samsung reallocates resources to its memory division, which has historically been more profitable, its foundry business may fall behind rivals like TSMC. Professor Lee Jong-hwan of Sangmyung University cautioned that this gap could hinder Samsung’s ability to catch up once market conditions improve.
According to industry sources, Samsung has already shut down over 30% of its production capacity of the above mentioned process nodes on its Pyeongtaek campus, with plans to increase this to nearly 50% by the end of the year.
Samsung Foundry is reportedly facing significant losses
According to South Korean publication ChosunMedia, the semiconductor division has struggled to secure sufficient mass production orders from major tech companies like Nvidia, AMD, and Qualcomm, leading to a reported deficit of 1 trillion won (roughly USD 724 million) in the last quarter. In an effort to minimize expenses, including electricity costs, the company is opting to turn off production equipment rather than maintaining idle operations.
This move reflects a broader industry trend, particularly as lower-than-expected orders from Chinese fabless semiconductor companies have affected production volumes in the 4 and 5 nm processes.
Increased U.S. regulations on semiconductor exports to China have prompted these companies to delay projects, exacerbating the situation for Samsung’s foundry business.
Experts warn that these shutdowns could weaken Samsung’s competitive position in the semiconductor market. As Samsung reallocates resources to its memory division, which has historically been more profitable, its foundry business may fall behind rivals like TSMC. Professor Lee Jong-hwan of Sangmyung University cautioned that this gap could hinder Samsung’s ability to catch up once market conditions improve.
