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
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Samsung's Foundry Operations Struggle with Unstable Yields and Client Losses
- Editor Kim Eun-jin
- 2024.09.30 15:30
In the second half of this year, Samsung began mass production of its Gate-All-Around (GAA) 3-nanometer (nm) second-generation process. However, the process has failed to capture the hearts of clients due to unstable yields. This technological hiccup has cast a shadow over the company's efforts to compete with industry leader TSMC, which held a commanding 62.3% market share in the second quarter, compared to Samsung's 11.5%.
On October 24, Samsung Electronics will hold its Foundry Forum online, an unusual move that reflects the difficult situation of its foundry business. Around mid-October, the company is also set to announce its third-quarter performance by business division. The securities industry predicts that the non-memory business division, which includes the foundry and system LSI sectors, will continue to struggle, with an operating loss forecasted to reach 500 billion won (approximately $385 million).
The crisis rumors surrounding Samsung's foundry will be confirmed through specific indicators on the 30th, according to the securities industry and the business community. In the second quarter, global market research firm TrendForce reported that Samsung Electronics ranked second with an 11.5% market share, while TSMC widened the gap to 50.8 percentage points.
Adding to the company's woes, the Exynos 2500 chip, made with the GAA 3-nanometer process, has a low yield, making its inclusion in next year's Galaxy S25 uncertain. The 2-nanometer process has also faced delays, further complicating Samsung's technological roadmap.
Global big tech companies like Nvidia and Apple have announced foundry collaborations with TSMC, leaving Samsung struggling to secure similar high-profile clients. Recently, there have been rumors within the company about reallocating some personnel working in the foundry to the memory business division. Externally, there are recommendations for Samsung Electronics to spin off its foundry business.
Samsung Securities has been vocal about the need for strategic changes. “Since the foundry business requires closer contact with clients, active localization like establishing additional plants in the US is necessary,” a representative from Samsung Securities stated. They further suggested, “How about spinning off the foundry business and listing it in the US?”
Experts are divided on the potential spin-off. “The spin-off of the foundry business is a strategic choice for the company, and it is difficult to predict any possibilities or effects,” one expert noted.
