Samsung Electronics Foundry Targets Annual Profits by 2028 Through Legacy Line Restructuring and Major Advanced Node Orders From Tesla and AI Clients
Samsung Electronics anticipates its contract chipmaking business to return to annual profits by 2028. During a recent internal company briefing regarding the unit's financial status, Han Jin man, the president of the foundry business unit, commented that it is extremely improbable for a positive balance sheet to be reached in the current financial year. According to report by ZDNet Korea, this announcement indicates a slight downward revision to recent market estimations which predicted that the manufacturing unit would be in the black this calendar year.
The foundry business will gradually eliminate its lower margin 8 inch mature lines in an effort to overcome existing deficits and achieve higher profit margins. Han admits that while previous contracts from during the global pandemic, during which unit price was a critical component, had very low unit pricing; more recent clients have entered contracts where unit prices are substantially higher. By cutting off its current 8 inch saturated lines, it is believed the business will be able to redirect its resources toward advanced semiconductor manufacturing.
The timeline for profitability faces a few domestic and structural issues, where the new corporate agreement to increase its special management bonus for the semiconductor division operating profit by 10.5% is a significant one. Han attributes the long expected profitability period to a lack of rapid divestment from reliance on mobile hardware, long maturity curves for yields of new process technologies, and prior mistakes in management of mature manufacturing lines. While taking full responsibility, Han remains confident that,
"we can regain competitiveness based on the strengths of our employees in engineering"
Positive improvements are being seen in the higher yield, advanced node manufacturing sectors. By Q1 the yield rate on the highly advanced 2 nanometer Gate all around process was over 60%. This along with increased utilization on the 4 and 8 nanometer mature nodes comes from a demand for base dies of HBM4, Groq processors and processors for the future Nintendo 2 game console.
Samsung's future profitability is further expected from their recent acquisition of a large scale artificial intelligence chip supply order with Tesla totaling $16.5 Billion or roughly 25 Trillion Won. The contract for the next generation chip supply is to fuel the new 2 nanometer fabrication plant in Taylor, Texas, set to open up next year.
