Samsung Electronics has confirmed that won"t be spinning off its foundry business amid speculation regarding potential structural changes. According to a report by Reuters, the company has stated that it will not separate its foundry business from the rest of the company despite ongoing financial losses and other challenges that it is currently facing.
For starters, Samsung"s foundry business is part of the company"s semiconductor business. It specializes in manufacturing chips for other companies like "fab-less" firms that design but do not produce their own semiconductors. This business is really important for Samsung as demand for advanced chips has surged a lot due to high demand in sectors like AI, high-performance computing (HPC), and even automotive electronics.
Despite the high demand, Samsung"s foundry division is currently facing a lot of challenges. As competitors like Taiwan Semiconductor Manufacturing Company (TSMC) have grown significantly over the years, Samsung holds only around 13% of the global foundry business as compared to TSMC"s 62% and is continuing to decrease.
Samsung"s foundry business has also faced consecutive losses exceeding KRW 1 trillion (around $750 million) in 2024. The company has also been struggling with unstable production yields with its advanced 3nm process technology, with reports indicating that the yields for chips produced using this technology have not met client expectations, leading to difficulties securing major customers and contracts.
Recently, speculations have been made about potential structural changes within Samsung"s foundry operations. A statement from a representative from Samsung Securities suggested that separating its foundry business as a sole entity and listing it in the U.S. could be viable. However, it now looks like Samsung has clearly stated that it will not be doing so.
Despite these challenges, Samsung is trying to turn it all around. The company is planning to increase its revenue from AI and HPC chip orders significantly by 2028 while reducing reliance on mobile chip sales. It also plans to invest in advanced technologies, like the 2nm process, to secure high-profile contracts in the future.
Via Reuters