Samsung Electronics Says It Is Not Interested in Spinning Off Foundry Business

Samsung has been expanding into logic chip designing and contract chip manufacturing to lower its reliance on bread-and-butter memory chips.

By Reuters | Updated: 7 October 2024 17:48 IST

Highlights

Samsung is the world's largest memory chipmaker
Since 2019 Samsung has invested billions in contract chip manufacturing
As per sources, Samsung has struggled to win big orders

Samsung is world's largest memory chipmaker.

Samsung Electronics is not interested in spinning off its contract chip manufacturing business as well as its logic chip designing operation, its chairperson Jay Y. Lee told Reuters on Monday.

Analysts say the two businesses are incurring billions of dollars of annual losses due to weak demand and have been dragging down the overall performance of the South Korean company, which is the world's largest memory chipmaker.

Samsung has been expanding into logic chip designing and contract chip manufacturing to lower its reliance on bread-and-butter memory chips. Logic chips are used to process data.

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Lee announced his vision in 2019 to overtake Taiwan's TSMC as the world's largest contract chipmaker by 2030.

The company has since announced billions of dollars of investments in contract chip manufacturing, building new plants in South Korea and the United States.

However, several sources familiar with the matter have told Reuters that Samsung has struggled to win big orders from customers to fill up the new capacity.

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Asked if Samsung was considering carving out the chip manufacturing business called foundry or its System LSI logic chip designing business, Lee told Reuters: "We are hungry to grow the business. Not interested in spinning (them) off."

Lee also said Samsung's project to build a new chip factory in Taylor, Texas has been "a little bit tough, because of a changing situation (and the US presidential) election."

He did not elaborate. Samsung Electronics did not comment further.

Lee was speaking during a visit to the Philippines where he accompanied South Korean President Yoon Suk Yeol to a summit with President Ferdinand Marcos Jr.

In April, Samsung said it had pushed back the production schedule of the Taylor plant to 2026 from its earlier plan of late 2024, and said operations would be managed in a phased manner depending on customer demand.

The move underscores challenges it faces in its efforts to overtake bigger rival TSMC, which counts Apple and Nvidia as major customers.

Last year, Samsung posted an operating loss of KRW 3.18 trillion ($2.4 billion or roughly Rs. 19,830 crore) from the foundry and System LSI businesses, according to average estimates of nine analysts reviewed by Reuters.

Samsung does not provide a performance breakdown of the two businesses.

Analysts estimate that the two operations would report another loss of KRW 2.08 trillion (roughly Rs. 12,971 crore) this year.

© Thomson Reuters 2024

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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