Samsung Electronics is not interested in spinning off its foundry business
Samsung Electronics is not interested in divesting from contract chip manufacturing and logic chip design, Chairman Jay Y. Lee told Reuters on Monday.
Analysts say the two companies are suffering billions of dollars in losses annually due to weak demand and have dragged down the overall performance of the South Korean company, which is the world’s largest memory chip maker.
Samsung has expanded into logic chip design and contract chip manufacturing to reduce its reliance on commodity memory chips. Logic chips are used to process data.
Lee announced in 2019 his vision to overtake Taiwan’s TSMC as the world’s largest contract chipmaker by 2030.
The company has since announced billions of dollars in investments in contract chip manufacturing and the construction of new factories in South Korea and the United States.
However, several sources familiar with the matter told Reuters that Samsung has struggled to secure large customer orders to fill the new capacity.
Asked whether Samsung was considering splitting up the chip manufacturing company called Foundry or its System LSI Logic Chip design business, Lee told Reuters: “We are hungry to grow the company. We are not interested in spinning it off.”
Lee also said that Samsung’s project to build a new chip factory in Taylor, Texas has been “a little difficult, due to a changing situation (and the US presidential election”).
He didn’t work it out. Samsung Electronics made no further comment.
Lee spoke 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 postponed the Taylor plant’s production schedule to 2026 from its previous plan of late 2024, and that operations would be managed in phases depending on customer demand.
The move underlines the challenges it faces in its efforts to overtake larger 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 its foundry and System LSI businesses, according to average estimates of nine analysts reviewed by Reuters.
Samsung does not provide a performance overview of the two companies.
Analysts estimate that the two operations would report another loss of KRW 2.08 trillion (about Rs. 12,971 crore) this year.
© Thomson Reuters 2024
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