Any suggestions for Samsung to get out of the rut? The remedy for its slow transformation may be hidden in the experience of Japanese peers. According to reports by Nikkei and Korea media outlet edaily, Samsung has begun researching Japanese companies, led by its Future Business Planning Division.

Citing Nikkei’s report on October 16^th, edaily notes that Samsung’s Future Business Planning Division, which is directly under the charge of Chairman Jay Y. Lee himself, plans to analyze the operations of 110 Japanese companies to study the decline and revival of the Japanese electronics industry. The main objective of the initiative is to identify and nurture business opportunities for Samsung, the reports suggest.

Notably, the research is said to include major tech firms such as Sony Group, which has gradually shifted its focus from hardware to content-oriented businesses like gaming, music, and film, edaily notes. Hitachi, a paradigm of downsizing its original business empire to focus on key growth areas instead, is rumored to be another research subject.

The reports indicate that Samsung’s Future Business Planning Division is gathering not only top employees from various divisions of the group but also individuals with business experience from outside, as it tries to “seek answers from the past for the future.”

Interestingly though, Samsung seems to be in the same shoes as its Japanese rivals a few years ago. Nikkei states that the South Korean tech giant surpassed Japanese companies in the semiconductor and television sectors, but now has found itself in a defensive position when being gradually caught up by Chinese companies, much like the situation Japanese firms used to get stuck in.

Samsung reported its third-quarter earnings last week. The company’s operating profit was initially expected to exceed 10 trillion won, but the actual performance fell short of that target. In terms of chip making business, it is lagging behind foundry giant TSMC due to unstable 3nm yield rates. Regarding memory business, SK hynix is claiming the throne of HBM amid AI boom.

Read more

• [News] Lagging behind SK hynix in HBM, Samsung Plans Significant Year-end Cuts to Chip Executives
• [News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

(Photo credit: Samsung)

According to a report from Reuters, Samsung Electronics announced on Tuesday that workers at their Indian unit have chosen to end their strike at the factory in Tamil Nadu, southern India, ending a labor protest that lasted over a month.

The report noted that over 1,000 Samsung India workers have been protesting near the factory close to Chennai in Tamil Nadu since September 9, calling for higher wages and official recognition of their union.

Reuters pointed out that the strike at the plant was supported by the Centre of Indian Trade Unions (CITU) and was the largest labor dispute in recent years in the country. This situation raises concerns about Prime Minister Narendra Modi’s attempt to attract investors for local manufacturing.

According to Reuters, Samsung India stated that it appreciated CITU’s decision to call off the strike at the plant. However, the company did not disclose the terms of the settlement.

The report indicated that it was confirmed by the Tamil Nadu state government that the strike has ended. The state government confirmed that representatives from Samsung and the striking workers had taken part in the discussions.

As stated by Reuters, the plant employs approximately 1,800 workers and manufactures refrigerators, TVs, and washing machines. It is one of Samsung’s two factories in India and plays a crucial role in the company’s ambitions, contributing about one-fifth of its USD 12 billion in sales in India for the 2022-23 fiscal year.

Previously, Samsung Electronics also encountered a labor strike in Korea. After a three-day strike beginning on July 8, the labor union announced plans for an indefinite strike due to the lack of consensus with Samsung. However, according to The Chosun Daily, the union called off the strike in August, while the future of negotiations between Samsung and the labor union remains uncertain.

Read more

• [News] Samsung’s Labor Union Intends to Launch Indefinite Strike

(Photo credit: Samsung)

As ASML accidentally released its financial report nearly a day ahead of its schedule due to a “technical error,” the Dutch semiconductor giant’s Q3 performance and its forecast for 2025 have also startled all by reporting orders at half of what the market predicted, raising concerns on the lackluster outlook of semiconductors despite strong demand for AI-related chips, according to the reports by Bloomberg and Reuters.

The result is regarded as a warning signal, as it might imply the weak performance for ASML’s major clients, such as tech heavyweights Intel and Samsung, the reports note. TSMC, another of ASML’s client, will release its Q3 earnings results tomorrow.

ASML shares plummeted 16%, marking their largest drop since June, 1998, the reports by Reuters and Bloomberg state.

Lackluster Q3 Bookings and 2025 Outlook as Customers Remain Cautious

ASML, known for producing the world’s most advanced chipmaking equipment such as High-NA EUV machines, posted a net profit of 2.1 billion euros on revenue of 7.5 billion euros (USD 8.2 billion) in Q3. However, it reported third-quarter bookings of €2.6 billion (USD 2.8 billion), falling short of the average estimate of €5.39 billion from analysts surveyed, according to Bloomberg.

According to its press release, ASML revised its 2025 total net sales forecast to a range of €30 billion to €35 billion, down from its previous estimate of up to €40 billion.

For next year, the company anticipates a gross margin between 51% and 53%, lower than the prior projection of 54% to 56%, mainly due to delays in the rollout of its high-end extreme ultraviolet machines.

According to a statement by ASML Chief Executive Officer Christophe Fouquet cited by the reports, the recovery of the semiconductor industry is progressing more slowly than anticipated, and this cautious outlook is expected to persist into 2025, leading to more conservative behavior from customers.

Key Clients in Trouble while Chip War Remains an Issue

It is worth noting that according to Reuters, ASML indicates that despite strong demand for AI-related chips, other segments of the semiconductor market are facing prolonged weakness. This has caused logic chip manufacturers to postpone orders, while memory chip companies are only planning “limited” expansions in new capacity.

According to a report from South Korean media outlet Business Korea, Samsung is said to mull to reduce its procurement of ASML’s next-generation EUV lithography equipment. Reportedly, Samsung initially planned to purchase more than three units of the next versions, EXE:5200, EXE:5400, and EXE:5600, over the next ten years. However, the company has now decided to introduce only the EXE:5200.

On the other hand, another struggling semiconductor giant, Intel, has secured five units of High-NA EUV machines from ASML to ensure its progress with the 2nm node, according to a previous report by TheElec. However, as the company has been doing its best to reduce expenses through restructuring and delaying overseas expansion, whether it will stick to the original purchase plan remains to be seen.

The report by Bloomberg also warns that while China was ASML’s largest market, the demand from China may slow in the coming periods, as Washington’s ongoing chip war with Beijing remains a persistent long-term concern for ASML.

Read more

• [News] Intel Completes Assembly of Second High-NA EUV System, ASML Confirms
• [News] Samsung Reportedly Reduces Procurement of ASML’s Next-Generation EUV Lithography Equipment

(Photo credit: ASML)

Though has yet to disclose the actual progress on its 12-Hi HBM3e verification with AI chip giant NVIDIA, Samsung is rumored to lower its target for the maximum production capacity (CAPA) of HBM by the end of 2025, which echoes the speculation on delays of HBM3e mass production for key customers, according to Korean media outlet ZDNet.

It is worth noting that the struggling memory giant reportedly plans to lower the capacity target by over 10%, from the initial monthly goal of 200,000 units to 170,000 units by the end of next year, ZDNet suggests, as it now takes a relatively cautious approach to facility investment plans.

According to the report, as of the second quarter, in order to narrow the gap with competitors such as SK hynix, Samsung had planned to increase HBM production capacity to 140,000–150,000 units per month by the end of this year, and up to 200,000 units per month by the end of next year.

At the Q2 earnings call in late July, Samsung disclosed an ambitious roadmap for its HBM products. According to a previous report from Business Korea, Samsung expects the share of HBM3e chips within its HBMs to surpass the mid-10 percent range in the third quarter, and speedily grow to 60% by the fourth quarter. The company also projects its HBM sales to increase three to five times in the second half of 2024.

However, the scenario has changed a few months later. Citing a source familiar with the situation, the report by ZDNet notes that Samsung has decided to slow down the pace of facility investments due to the underperformance of its HBM business. Further discussions on investments will only proceed once its HBM3e supply for NVIDIA is confirmed, the source indicates.

According to the analysis by TrendForce, achieving stable yields for HBM3 and HBM3e 8-Hi products required at least two quarters of learning in previous generations. Based on this precedent, the learning curve for HBM3e 12-Hi is unlikely to shorten significantly, especially with the rapid market shift toward the 12-Hi version.

Furthermore, key products such as NVIDIA’s B200 and GB200, as well as AMD’s MI325 and MI350, will adopt HBM3e 12-Hi. The high cost of these systems will also demand strict stability, complicating mass production and adding another layer of uncertainty.

Ahead of its Q3 earnings call, Samsung already warned its profit would fall short of market expectations, while issuing an apology for the disappointing performance. Samsung’s operating profit for the third quarter is expected to reach 9.1 trillion won, which is below the expected 10 trillion won.

Another report by The Korea Times notes that the market expected SK hynix to see a substantial increase in operating profit driven by strong HBM demand, potentially outpacing Samsung’s semiconductor division.

To boost its competitiveness in the semiconductor industry, Samsung intends to assign research and development staff directly to its manufacturing facilities. This initiative seeks to enhance communication and collaboration with on-site production teams, according to a report by SmBom.

Read more

• [News] Lagging behind SK hynix in HBM, Samsung Plans Significant Year-end Cuts to Chip Executives
• [News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

(Photo credit: Samsung)

After reporting disappointing third-quarter earnings forecast, Samsung’s next move has become the center of market attention. According to a report by Business Korea, to turn the situation around, Samsung may shift its strategy focus to early HBM4 mass production, as well as targeting advanced foundry solutions below 2nm.

A couple of days ago, Samsung warned its third-quarter profit would probably reach 9.1 trillion won, falling short of market expectations. Jeon Young-hyun, the head of Samsung’s Device Solutions (DS) division, issued an unusual public apology in the meantime.

Citing industry sources, Business Korea notes that Samsung’s DS division is expected to post an operating profit of around 5 trillion won (about USD 3.8 billion) for the third quarter, which is reportedly below the market expectation of 6 trillion won. The figure is significantly lower than SK hynix’s projected quarterly operating profit, which is expected to be in the high 6 trillion won range, according to the report.

Samsung May Accelerate HBM4 Progress to Turn the Tide

The series of setbacks have prompted the struggling giant to take action. As Samsung’s lackluster performance could be attributed to its delay in supplying NVIDIA with its 12-layer HBM3e product, industry insiders cited by Business Korea suggest that accelerating the mass production of HBM4, as well as introducing 2nm foundry solutions, could just be the remedies Samsung needs.

In terms of the HBM market, in which Samsung is lagging behind SK hynix on HBM3e verification, the report indicates that Samsung is expected to prioritize the early mass production of HBM4, which is projected to become mainstream in 2025.

A source familiar with the situation told Business Korea that HBM orders from companies other than NVIDIA would rise next year. Major tech firms, including AMD, Amazon, Microsoft, Google, and Qualcomm, are also working on AI semiconductors. Therefore, it does not necessarily mean that Samsung should concentrate solely on NVIDIA, and it could accelerate supply contracts with NVIDIA’s competitors, the report notes.

TrendForce’s latest findings indicate that Samsung, SK hynix, and Micron have all submitted their first HBM3e 12-Hi samples in the first half and third quarter of 2024, respectively, and are currently undergoing validation. SK hynix and Micron are making faster progress and are expected to complete validation by the end of this year.

2nm Advancements Would be Another Focus

On the other hand, in terms of the foundry sector, the report suggests that Samsung is expected to further enhance its ‘turnkey order’ strategy. This approach addresses concerns about technology leakage while providing HBM as part of a comprehensive package.

According to the report, Samsung is set to begin mass production of its GAA 2nm process in 2025. The company also aims to complete the development of the 2nm process with Backside Power Delivery Network (BSPDN) technology by 2027. Having secured 2nm orders from Japan’s AI unicorn Preferred Networks (PFN) and U.S. AI semiconductor company Ambarella, Samsung reportedly plans to seek collaboration with major tech firms.

To attract customers, Samsung will host the “Foundry Forum 2024” online on October 24. Previously scheduled to be held in Beijing, the event will now be conducted virtually, which aligns with the company’s efforts to reduce costs. Will it make further progress in advanced nodes? The whole world is watching.

Read more

• [News] Lagging behind SK hynix in HBM, Samsung Plans Significant Year-end Cuts to Chip Executives
• [News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

(Photo credit: Samsung)