Samsung Rejects Rumors of Spinning Off Foundry Business Amid Market Challenges

Samsung Electronics Chairperson Jay Y. Lee stated that the company has no intention of spinning off its foundry or logic chip designing businesses. Despite significant challenges in securing consumer orders, Samsung remains committed to expanding its chip manufacturing operations to rival industry leader TSMC.

Samsung Chairperson Jay Y. Lee Rules Out Spinning Off Chip Businesses Amid Growing Losses and U.S. Challenges

On October 7, Samsung Electronics' chairperson, Jay Y. Lee, informed Reuters that the company has no intention of separating off its contract chip manufacturing business or its logic chip designing operation.

According to analysts, the two businesses are causing the South Korean company, the world's largest memory chip manufacturer, to incur billions of dollars in annual losses due to poor demand.

Samsung has been diversifying its operations to include logic chip design and contract chip manufacturing to reduce its dependence on memory chips. Data processing is accomplished through the utilization of logic processors.

In 2019, Lee declared his intention to surpass Taiwan's TSMC as the world's largest contract semiconductor manufacturer by 2030.

Since then, the company has announced billions of dollars in investments in contract chip manufacturing, including constructing new facilities in the United States and South Korea.

Nevertheless, numerous well-versed sources have informed Reuters that Samsung has encountered significant challenges in securing substantial consumer orders to utilize the new capacity fully.

Asked if Samsung was considering carving out the chip manufacturing business, 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 U.S. presidential) election."

He refrained from providing further details. Samsung Electronics declined to provide additional commentary.

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

Samsung Faces Delays at Texas Chip Plant as Foundry and Logic Divisions Struggle with Continued Losses

Samsung announced in April that the production schedule for the Taylor plant had been postponed from late 2024 to 2026. The company also stated that operations would be managed in phases, contingent upon customer demand.

The action highlights the obstacles it encounters in its pursuit of dominance over its larger competitor, TSMC, which has Apple and Nvidia as significant clients.

According to the average estimates of nine analysts reviewed by Reuters, Samsung's foundry and System LSI divisions generated an operating loss of 3.18 trillion won ($2.4 billion) last year.

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

According to analysts, the two operations are expected to disclose an additional loss of 2.08 trillion won this year.