Samsung Foundry Sector Projected to Return to Profit Early via 2nm Yield Improvements and Global Partnerships with Tesla and Nvidia
Samsung Electronics’ internal forecasts indicate the foundry sector will be back in the black and make a profit from as early as the third quarter (Q3). This updated timetable would beat the company’s prior outlook that expected recovery to begin by the end of the year, as reported by biz chosun. The estimated profit would finally end the continuous losses from its manufacturing unit, which have been in the red from the time of the downturn beginning in 2022.
The company's 2nm gate all around (GAA) process yield rose above 60% during Q1. While this figure still falls below the 70% mark that's generally needed for highly profitable mass production, market experts say this figure is high enough to launch production runs and gain new customers. The chip manufacturer confirmed in their Q1 earning calls that its advanced semiconductor manufacturing lines have been running at maximum capacity even during the slower seasonal quarter for chip sales.
The commercial progress made in the quarter will likely be translated into sales revenues from Q2 onwards as mass production begins in regards to new corporate partnerships. Samsung signed with Tesla a contract worth KRW 22.8tr to mass produce autonomous driving chips and its new Texas Taylor fab is expected to enter production of 2nm AI5 and AI6 chips during H2 2024. Additionally, Nvidia’s CEO, Jensen Huang, openly identified Samsung as a manufacturing partner during a keynote speech to unveil Groq3.
The company anticipates an increase of over 130% for its total 2nm order books in comparison to last year. In addition to Tesla and Nvidia, the South Korean conglomerate is building more customer partnerships with top tech firms such as Apple and Nintendo. Reports also state that initial production of the base dies for HBM4 high bandwidth memory is completely sold out for clients already. The KRW37bn facility in Texas will reportedly help to alleviate the fixed costs and depreciation problems weighing down the company’s financial statements as it reaches active operation.
However, the external market situation does not solely benefit Samsung. Its closest competitor foundry TSMC has reached production capacity limitations in its advanced production lines due to extreme high demand of artificial intelligence hardware components globally. This has forced a number of fabless chip designers to find alternative manufacturing partners. Analysts state AMD is actively exploring dual sourcing strategies for its new series of graphics processing units, likely sending some portion of its order volume to Samsung.
