Samsung Electronics boss: No spin-off of the foundry business
Despite annual losses of billions in its chip division, Samsung Electronics is not interested in spinning off its foundry business.
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Samsung Electronics has no interest in spinning off its contract manufacturing business for semiconductors and its logic chip design business. This was stated by the chairman of the South Korean electronics group, Jay Y. Lee, as exclusively reported by the Reuters news agency on Monday.
"We want to expand the business. We are not interested in spinning it off," Lee told Reuters when asked if Samsung was considering spinning off the contract manufacturing business of products for other semiconductor companies, known as foundry, or its system LSI logic chip design business. Lee made the statement during a visit to the Philippines, where he accompanied South Korean President Yoon Suk-yeol to a summit with Philippine President Ferdinand Marcos Jr.
Samsung's chip business generates annual losses in the billions, which weigh on the Group's overall balance sheet. Sales in the "Device Solutions (DS)" division, as Samsung calls its chip business, shrank by 32 percent in 2023 compared to the previous year, and by as much as 36 percent for memory chips. According to Reuters, analysts estimate that the Foundry and System LSI businesses will post another combined loss of 2.08 trillion won (1.4 billion euros) this year, following last year's loss.
Billions in investments and a lack of orders
In recent years, Samsung has expanded into the development of logic chips and the contract manufacturing of chips (foundry) to reduce its dependence on DRAM and flash chips. Logic chips are used to process data. Before the pandemic, Lee had declared that he would overtake Taiwanese company TSMC as the world's largest contract chip manufacturer by 2030. The TSMC group, which counts Apple and Nvidia among its main customers, is the global market leader in chip production, far ahead of Samsung.
Since Lee's announcement, Samsung has built new plants in South Korea and the United States, but has had to postpone the planned start of chip production at the new site in Taylor, Texas. Samsung is having difficulties obtaining large orders from customers to utilize the new capacities, writes Reuters, citing several sources familiar with the matter.
Although Samsung Electronics separated its chip manufacturing from its design business in 2017, analysts say foundry customers remain concerned that Samsung could share their technology secrets with its design unit, the news agency added. To gain customers' trust, it would be better for Samsung to split its foundry business in principle, former Samsung engineer and professor of system semiconductor engineering at Sangmyung University in Seoul, Lee Jong-hwan, told Reuters. In his opinion, however, it would be more difficult for the foundry division to survive as an independent company, as it could lose access to financial support from the memory chip business.
(akn)
