According to a report from Silicon Angle, four former Intel directors have published an article in Fortune, urging the company to spin off its fab business.

The authors include Reed Hundt, a onetime Federal Commission Communications chair, Charlene Barshefsky, former U.S. Trade Representative, James Plummer, Stanford University’s dean of engineering for over a decade, and David Yoffie, a Harvard Business School professor and longtime Intel director.

Their argument basically are based on two reasons. First, they argue that if Intel is going to be acquired by other companies, the potential buyers would likely prioritize cost-cutting and see little value in the money-losing manufacturing fab. They highlight this possibility due to Intel’s recent significant drop in stock price, and with its fab business operating at a substantial loss, it could become a target for cost-cutting initiatives.

Secondly, according to their article in Fortune, they noted that since Intel operates its own foundry within its corporate structure, it struggles to attract business, as other chip design companies see it as a potential competitor.

In their article in Fortune, they pointed out that Nvidia, Qualcomm, Broadcom, and others are all looking for a second manufacturing option other than TSMC, but will continue to be cautious about Intel as long as it remains a direct competitor. They indicate that spinning off the fab business would alleviate these concerns.

They argue that while the U.S. government has already promised up to USD 8.5 billion in grants and USD 11.5 billion in low-cost loans for Intel, the government should further demand Intel to split its design and manufacturing operations into two completely independent companies.

On the other hand, Intel’s former CEO Craig Barrett has a different perspective on whether Intel should split its foundry business. In an article published in Fortune, Barrett argues that separating Intel into two distinct companies is not the answer. He pointed out that this approach would hinder the foundry business’s ability to keep pace with the latest technology, leaving the U.S. government dependent on foreign suppliers like TSMC for cutting-edge advancements.

Previously on September 16th, Intel announced that it will transform its foundry business into a wholly-owned subsidiary with its own board of directors. According to its press release, this new structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

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(Photo credit: Intel)

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)

Samsung’s foundry business faces ongoing losses and strategic uncertainty. A report from Business Korea reveals that Samsung Securities, a subsidiary of the group, issued a report in July titled “Geopolitical Shifts and Industry,” recommending that Samsung spin off its foundry division and list it in the U.S.

In the second half of this year, Samsung ramped up production of its Gate-All-Around (GAA) 3nm second-generation process, but unstable yields have failed to attract clients.

According to TrendForce, TSMC held 62.3% of the global foundry market in Q2, while Samsung captured just 11.5%. Major tech players like Nvidia and Apple have partnered with TSMC, leaving Samsung struggling to secure similarly high-profile contracts.

Business Korea reports that Samsung will hold its Foundry Forum online on October 24, highlighting the challenges its foundry division is facing. Around mid-October, the company is also expected to announce its third-quarter results, with analysts cited by Business Korea predicting a 500 billion won ($385 million) loss in the non-memory segment, which includes the foundry and system LSI businesses.

Adding to the woes, the Exynos 2500 chip, produced with the GAA 3nm process, is yielding poorly, casting doubt on its inclusion in next year’s Galaxy S25. Delays in the 2nm process further complicate Samsung’s roadmap.

Rumors are circulating about a potential reallocation of foundry personnel to the memory division. Externally, there are calls for Samsung to spin off the foundry business. Samsung Securities advocates for strategic shifts, suggesting further U.S. expansion and the potential spinoff and U.S. listing of the foundry division.

In fact, the suggestion for Samsung to spin off its foundry business has been driven by Intel’s recent decisions. On September 16th, Intel announced that it would transform its foundry division into a wholly-owned subsidiary with its own board of directors.

Meanwhile, Intel also signed a multi-billion-dollar, multi-year deal with Amazon to manufacture chips for Amazon Web Services’ (AWS) AI data centers.

(Photo credit: Samsung)