Amid concerns on its HBM progress and yield issues on advanced nodes, Samsung has released its full Q3 2024 financial results, with the quarterly revenue reaching KRW 79.1 trillion won (approximately $57.35 billion), hitting an all-time high. However, its semiconductor business remains lackluster, as the DS Division recorded a quarterly operating profit of 3.86 trillion won, marking a 40% decline from the previous quarter.

According to a report by CNBC, while demand for memory chips driven by AI and traditional server products provided some support, Samsung noted that “inventory adjustments negatively impacted mobile demand.” The company also highlighted challenges with “the increasing supply of legacy products in China.”

Samsung continues to face challenges in its most advanced wafer foundry processes. According to TrendForce, the company has yet to solidify its reputation as a reliable partner for cutting-edge nodes, which may hinder its ability to secure orders from top IC design houses and potentially delay its efforts to expand capacity.

Losses in Foundry and System Chip Lead to Profit Drop in DS Division, while Memory Remains Strong

On October 31, Samsung Electronics reported Q3 consolidated revenue of KRW 79.1 trillion, an increase of 7% from the previous quarter, on the back of the launch effects of new smartphone models and increased sales of high-end memory products. According to Business Korea, the Q3 revenue exceeded its previous revenue record of KRW 77.78 trillion, set in Q1 2022.

However, operating profit declined to KRW 9.18 trillion, largely due to one-off costs, including the provision of incentives in the Device Solutions (DS) Division, according to its press release.

In terms of the DS Division, which encompasses the memory and foundry business, it posted KRW 29.27 trillion in consolidated revenue and KRW 3.86 trillion in operating profit in the third quarter, marking almost a 50% drop from the prior quarter’s KRW 6.45 trillion.

According the Korean Economic Daily, Samsung attributed the weaker profit to higher-than-anticipated one-time expenses totaling around KRW 1.5 trillion, which included employee performance bonuses, as well as escalating losses in its foundry and system chip divisions, each estimated at over KRW 1.5 trillion.

On the other hand, the company noted that its memory chip business performed better than anticipated, with an estimated profit of around KRW 7 trillion for the quarter, the Korean Economic Daily notes.

Memory business sales reached KRW 22.27 trillion, more than doubling from the previous year, driven by increased demand for high-end chips used in AI devices and servers, such as HBM, DDR5, and server SSDs, according to Samsung.

Key Takeaways for 2025 Outlook

In the fourth quarter, Samsung notes that while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels.

As for the Foundry Business, Samsung claims that the unit successfully met its order targets — particularly in sub-5nm technologies — and released the 2nm GAA process design kit (PDK), enabling customers to proceed with their product designs. It notes that the Foundry Business will strive to acquire customers by improving the process maturity of its 2nm GAA technology.

Looking ahead to 2025, for DRAM, Samsung plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on. For NAND, it will proactively respond to the high-density trend based on QLC products — including 64TB and 128TB SSDs — and solidify leadership in the PCIe Gen5 market by accelerating the tech migration from V6 to V8.

The Foundry Business, on the other hand, aims to expand revenue through ongoing yield improvements in advanced technology while securing major customers through successful 2nm mass production. In addition, integrating advanced nodes and packaging solutions to further develop the HBM buffer die is expected to help acquire new customers in the AI and HPC sectors, according to Samsung.

(Photo credit: Samsung)

According to a report from TechNews, Samsung is expanding its use of Qualcomm’s Snapdragon processors in its Galaxy flagship phones, while its own Exynos processors are primarily utilized in mid- to low-end smartphones, tablets, and home appliances.

However, Exynos processors may no longer be used even in home appliances, as Samsung is reported considering installing Qualcomm’s processors in these devices, according to the report from SEDaily.

The report from SEDaily pointed out that since Samsung needs to install expensive Qualcomm processors in the Galaxy S25 series of smartphones set to launch in 2025, it plans to actively use Qualcomm products in home appliances to achieve related cost efficiencies.

The report indicated that, according to Yoo Mi-young, Vice President and Head of the Software Development Team in the Digital Appliances (DA) Division, Samsung is currently developing new products aimed at launching home appliances that utilize large-scale language models, or edge computing, in 2025. Additionally, Samsung is working on its own low-power, high-performance neural network processing unit chip.

Furthermore, the report noted that the home appliance most affected will be the refrigerator, as the latest Samsung refrigerators feature AI that can identify ingredients and recommend recipes. To support this AI function, powerful processors will be needed.

According to the report, Samsung has been developing Exynos 2500 series processors in the past. However, due to performance and yield issues, sources indicate that Samsung’s Galaxy S25/S25+/Ultra and other mobile phones will use Qualcomm Snapdragon 8 Elite processor.

The report indicated that the price of the Snapdragon 8 Elite processor is approximately twice that of the Exynos. Therefore, Samsung is reportedly planning to actively incorporate Qualcomm chips into home appliances to help share costs, which also aligns with the trend toward smart home devices.

According to the report, the price of the latest Qualcomm Snapdragon processor has increased by 20%, so Samsung’s cost burden has also increased significantly. With the trend toward smart home appliances, actively expanding the use of Qualcomm chips in these products is expected to help reduce Qualcomm’s mobile AP purchase prices.

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(Photo credit: Samsung)

As HBM has become a key battlefield for memory giants amid the AI wave, NAND chips with more layers, which are also ideal for high-capacity solid-state drives (SSDs) used in AI data centers, are in great demand as well. According to the latest report by the Korea Economic Daily, Samsung aims to introduce the 400-layer vertical NAND by 2026 to capture a leading position in the booming AI-driven storage market.

According to the Korean media outlet, following Samsung’s current mass production of its 286-layer V9 NAND flash chips, the company’s Device Solutions division is targeting the production of vertical NAND with a minimum of 400 stacked layers as early as 2026.

Samsung’s major rival, SK hynix, is also developing 400-layer NAND, aiming to get the technology ready for mass production by the end of 2025, according to a report by etnews in August. The current HBM leader reportedly eyes the full-scale production for the 400-layer NAND to begin in the first half of 2026, which is roughly similar to Samsung’s timetable.

Samsung Develops “Dream NAND for AI” to Boost Density Per Unit Area by 1.6 Times

The report by the Korea Economic Daily notes that in conventional NAND chips, memory cells are stacked above the peripheral circuitry, which acts as the chip’s brain. However, stacking beyond 300 layers has frequently caused damage to the peripheral.

Back in 2013, Samsung was the industry’s first to introduce V NAND chips with vertically stacked storage cells to maximize capacity, the report notes.

Now, to address the issue occurred, Samsung is reportedly developing its advanced 10th-generation V NAND (V10), in which it intends to use an innovative bonding technology where cells and the peripheral circuitry are manufactured separately on distinct wafers before being bonded together.

Named by Samsung as bonding vertical NAND Flash or BV NAND, the technology is also praised by Samsung as the “dream NAND for AI,” stating that it will boost bit density per unit area by 1.6 times, according to the Korea Economic Daily.

This method is expected to support “ultra-high” NAND stacks by offering substantial storage capacity and efficient heat dissipation, which is ideal for SSDs used in AI data centers.

Roadmap for 1,000-layer NAND Revealed

Samsung is indeed ambitious as it also reveals the long-term roadmap for NANDs with more layers. According to the Korea Economic Daily, it plans to advance its stacking technology with the launch of V11 NAND in 2027, featuring a 50% increase in data input and output speed. Moreover, executives cited by the report state that the memory giant also aims to develop NAND with over 1,000 layers by 2030.

According to TrendForce’s latest research, in the second quarter of 2024, Samsung maintained its global leadership in the NAND Flash market with a 36.9% market share, up 0.2% from the previous quarter. SK Group followed with a 22.1% share, down 0.1%. Other key players include Kioxia (13.8%), Micron (11.8%), and Western Digital (10.5%).

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(Photo credit: Samsung)

As Qualcomm unveiled the Snapdragon 8 Elite chipset earlier this week, Samsung, which has been working on its in-house Exynos 2500 to improve the 3nm yield, is said to abandon the plan and go Snapdragon 8 Elite only for the entire Galaxy S25 series. To turn the tide, it is reportedly embarking on the development of its next-gen Exynos chip, set to be featured in the Galaxy S27, according to Korean media outlet Sedaily and Wccftech.

The chip is expected to be manufactured with Samsung’s 2nm node, probably the SF2P process, which is an improved version of its first generation 2nm process, the reports note. Therefore, this would be a key battleground for Samsung, as it has been suffering from yield issues regarding 3nm node with GAA architecture for long.

And it does look like that Samsung aims high for the chipset, as the next-gen Exynos chip has been reportedly codenamed “Ulysses,” the Roman name for Odysseus, the hero from Greek mythology, according to Sedaily.

According to the reports, the SF2P process is slated for mass production in 2026, with enhancements in both performance and power efficiency. To be more specific, SF2P aims to improve performance by 12% while reducing power consumption by 25% and chip area by 8% compared to its predecessor.

It is also worth noting that Samsung’s foundry division is reportedly producing test chips and verifying the process design to refine the node.

Citing an industry expert, Sedaily notes that Samsung’s foundry has consistently relied on Exynos APs as a key customer. By refining its processes through managing substantial Exynos orders, Samsung has the potential to enhance its competitiveness against TSMC in next-generation chip manufacturing, although the challenge remains significant.

The challenges ahead for Samsung is formidable for sure. Foundry giant TSMC’s 2nm is expected to enter volume production in 2025, and it is already creating a buzz, as Chairman C.C. Wei said earlier that customer inquiries for 2nm are even higher than those for 3nm. According to previous market speculations, tech giants such as Apple, NVIDIA and AMD are believed to be the first batch of TSMC’s 2nm customers.

Another major rival, Intel, has shelved the 20A process node to focus entirely on the more advanced Intel 18A, aiming to enter mass production in 2025.

Japanese chip manufacturer Rapidus, on the other hand, plans to establish a fully automated production line using robots and AI in northern Japan to produce 2nm chips for advanced AI applications, with mass production anticipated as early as 2027.

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(Photo credit: Samsung)

According to a report by China’s CCTV Finance on October 20, Samsung Electronics has recently begun restructuring its business, with the semiconductor division deciding to withdraw from the light-emitting diode (LED) business.

Samsung Electronics to Focus on Power Semiconductors

The report highlighted that Samsung Electronics’ exit from the LED business is primarily due to the group’s overall performance falling short of expectations.

According to Samsung Electronics’ preliminary unaudited financial results released on October 8 for the third quarter of 2024, both the company’s profit and revenue for the quarter fell below market expectations. Sales were 79 trillion KRW, a 17.2% year-on-year increase but lower than the market estimate of 81.57 trillion KRW. Operating profit was 9.1 trillion KRW, a 274.5% year-on-year increase but down 12.8% from the previous quarter, and also below analysts’ estimate of 11.5 trillion KRW.

Samsung entered the LED lighting business in 2012 by merging with Samsung LED. However, in recent years, the business has continued to struggle, gradually losing its competitive edge in the international market. Although the annual sales from this business reached approximately 10.4 billion RMB, Samsung believed that its contribution to the company’s overall sales was too small to ensure the desired profitability.

Therefore, Samsung decided to divest the LED business to focus more on core areas with better growth prospects, such as power semiconductors and Micro LED technology.

Power semiconductors are primarily used in electric vehicles, smartphones, energy storage, and home appliances. They are responsible for power conversion and current control, and are considered a crucial engine for accelerating industrial growth.

Samsung Expands Power Semiconductor Business

At the beginning of 2023, Samsung established a special task force for power semiconductors, and by the end of the year, it further reorganized its operations, transforming the LED division into the Power Semiconductor Division.

In July 2023, Samsung announced at its Foundry Forum that it would launch 8-inch gallium nitride (GaN) power semiconductor foundry services by 2025, targeting applications in consumer electronics, data centers, and automotive markets.

As part of this strategic plan, Samsung introduced German company Aixtron’s metal-organic chemical vapor deposition (MOCVD) system into its Giheung factory, which specializes in 8-inch wafer foundry, during the second quarter of this year.

Challenges Facing Samsung’s Semiconductor Business

Samsung’s semiconductor division, despite being one of its strongest sectors, is also facing increasing challenges.

In terms of wafer foundry, Samsung has long aimed to compete with TSMC. However, the two still show a noticeable gap in market share. According to the latest rankings from TrendForce in early September, TSMC held a dominant 62.3% market share in the second quarter, while Samsung, in second place, had a share of 11.5%.

Moreover, Samsung’s plans to build a wafer foundry in the U.S. have faced repeated delays. According to Reuters, Samsung has postponed the procurement of equipment for its Texas-based Taylor wafer plant due to difficulties in securing clients willing to collaborate.

The Taylor plant, with an investment of $17 billion, was originally intended to produce advanced chips for markets like artificial intelligence and smartphones, which require extreme ultraviolet (EUV) lithography equipment. Each standard EUV system costs approximately $150 million, and it is currently unclear how many units Samsung had originally planned to order from ASML. Both Samsung and ASML have declined to comment on the delayed equipment orders.

Earlier this year, media reports indicated that Samsung had delayed the mass production timeline for the Taylor plant from 2024 to 2026. However, without securing any cooperative clients, the plant’s prospects remain challenging, even with the delayed production schedule.

Some analysts suggest that if Samsung does not finalize orders for the necessary production equipment by early 2025, the production timeline could be further delayed, considering the time required from chip production to delivery.

Samsung Electronics plays a critical role in South Korea’s economy. As noted by China’s CCTV Finance, Samsung’s exports accounted for about 18% of South Korea’s total export volume last year. A decline in Samsung’s performance not only affects the competitiveness of South Korea’s semiconductor exports but also has a ripple effect on numerous upstream and downstream companies that collaborate with Samsung.

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(Photo credit: Samsung)