[News] Samsung Chairman Rejects Rumors of Spinning Off the Company’s Foundry Business

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Following Intel’s decision of carving out its foundry business, there are rumors circulating that the same move may benefit Samsung as well. However, according to the latest reports by Reuters and Business Korea, Jay Y. Lee, Chairperson of the South Korea semiconductor giant, has expressed no interest in spinning off its contract chip manufacturing and logic chip design operations.

Citing Lee’s remarks in his visit in Philippines on October 7th, Reuters notes that he has no plans to spin off the company’s struggling foundry and system LSI businesses, marking the first time he has publicly addressed the issue.

Samsung’s foundry business has been facing headwinds, as it reportedly suffers from unstable yields though it ramped up the production of its Gate-All-Around (GAA) 3nm second-generation process in the second half of the year, which hinders the company from attracting major clients.

According to Business Korea, Samsung Foundry reportedly faced a deficit of over 2 trillion won last year due to weak orders. The situation does not get better this year, as the company is anticipated to experience several trillion won in losses as well.

Therefore, a previous report from Business Korea reveals that Samsung Securities, a subsidiary of the group, recommended that Samsung should spin off its foundry division and list it in the U.S. in a report titled “Geopolitical Shifts and Industry.” However, the potential divestiture has been dismissed by Lee.

Citing Lee’s latest comments, Business Korea notes that Samsung is “eager to grow” the foundry business.” However, he also confirmed that Samsung’s plant in in Taylor, Texas, has faced hurdles, as he noted that the project has been “a bit tough due to changing circumstances (and the U.S. presidential) election,” according to Business Korea.

In response, Samsung has reportedly delayed the construction and orders for its Pyeongtaek Phase 4 (P4) facility and the second foundry plant in Taylor, Texas. According to Reuters, Samsung has pushed back the expected start date for operations at the under-construction foundry plant in Taylor from late 2024 to 2026.

According to Business Korea, Lee unveiled the ambitious “System Semiconductor Vision 2030” for Samsung in 2019, which aims to invest 133 trillion won in its system semiconductor sector, including foundries, by the end of the decade, with the objective of establishing Samsung as a leader in the system semiconductor market.

By 2021, the plan was said to be expanded to 171 trillion won, further underscoring Samsung’s commitment to this vision. However, Samsung has been struggling to rival TSMC in the foundry sector, while its leading position in the memory has also been challenged by SK hynix, which benefits from the booming demand of AI with its HBM.

(Photo credit: Samsung)