Samsung Electronics has been struggling to stabilize the financial situation of its Samsung Foundry business. This division is responsible for manufacturing both its own and third-party semiconductors. Recent reports suggested potential moves by the company in search of capital investment and greater profitability. Now, Samsung’s president has ruled out the possibility of spinning off the division.
According to analyst reports, one of the options for Samsung was to spin off its contract chip manufacturing (Foundry) and logic chip designing (System LSI) businesses. Both divisions have been facing billions of dollars in losses annually. The main reason for the “crisis” is the loss of big customers who have preferred to turn to other companies, such as TSMC. Low wafer yield issues at Samsung Foundry would even deprive the base Galaxy S25 of Exynos chips.
Samsung’s president rules out spinning off Foundry and System LSI businesses
Despite the financial difficulties facing Samsung’s chip manufacturing businesses, Samsung Electronics continues to hold the position of the world’s largest memory chip manufacturer. The company had increased its investment in Foundry and System LSI as a diversification strategy in order to be less dependent on traditional memory chips. However, Samsung can leverage its position in the memory chip segment to operate and stabilize the situation in the other areas.
When asked about carving out Samsung’s Foundry and System LSI businesses, the president of Samsung Electronics ruled out the possibility. “We are hungry to grow the business. Not interested in spinning (them) off,” said Jay Y. Lee.
The below-expected performance of Samsung Foundry and Samsung System LSI has been impacting the company’s overall financial results. Analysts estimate that Samsung will post a loss of 2.08 trillion won (about $1.55 billion) from both businesses this year. In 2023, Foundry and System LSI incurred operating losses of 3.18 trillion won (about $2.4 billion).
Samsung further away from its goal of overtaking TSMC by 2030
In 2019, Samsung’s chairman aimed to overtake TSMC as the world’s largest contract chipmaker by 2030. As part of that vision, the company invested billions of dollars in establishing new plants in the US and Korea. However, customer demand has not grown enough to fill the capacities of the new plants. The company has even experienced problems establishing any plants in the US. One was planned in Taylor, Texas, for 2024 but was delayed to 2026, likely due to delays in state investment as part of the Chips Act.
Meanwhile, TSMC, Samsung’s main rival in the segment, has some of the largest tech companies in its customer portfolio. Brands such as Apple, Nvidia, and Qualcomm have preferred to use the Taiwanese company’s factories for their flagship SoCs. So, in addition to investing in plants, Samsung Electronics has work to do to attract customers.
