Q1 Foundry Sales 'Record High'... Samsung Narrows Gap with TSMC

Government Also Supports Semiconductor Sector
Reviewing Support Measures Such as Talent Development, Regulatory Relief, and Investment Incentives

[Asia Economy Reporter Park Sun-mi] Samsung Electronics is expected to record its highest-ever foundry (semiconductor contract manufacturing) sales in the first quarter of this year. The gap with Taiwan's TSMC, the world's number one in market share, is also continuously narrowing, raising expectations that with government-level support measures to realize the 'semiconductor superpower' pledged by President-elect Yoon Suk-yeol, the goal of becoming the number one in system semiconductors by 2030 could become achievable.

◆Foundry Super Gap... Forecast of Highest Sales in Q1= According to the semiconductor and securities industries on the 13th, Samsung Electronics announced preliminary results for the first quarter of this year exceeding 77 trillion won, the highest ever, with foundry division sales estimated to reach 7 trillion won. This is the largest scale ever. Samsung Electronics will not separately disclose the foundry division's performance within the semiconductor business (DS) in the upcoming confirmed Q1 earnings announcement and conference call scheduled for the 28th. However, due to the ongoing global foundry supply shortage, foundry service prices have risen, leading to expectations that Q1 sales have grown significantly.

In fact, the current foundry industry has become able to increase unit prices and profitability due to fabless (semiconductor design-specialized) companies willing to place orders with advance payments. Global large fabless companies are lining up to entrust production to TSMC and Samsung Electronics, which dominate processes below 10nm, while small and medium fabless companies are being eliminated due to failure to secure foundry companies.

In the securities industry, despite Q1 being a seasonal low period for the semiconductor industry, Samsung Electronics' foundry sales are expected to exceed 7 trillion won, making it possible to surpass annual sales of 30 trillion won for the first time this year.

The barometer is TSMC, the world's number one in market share, which announced its results earlier. TSMC, specializing only in foundry business, recorded Q1 sales of 49.108 billion Taiwan dollars (about 20.8 trillion won), a 35.5% increase compared to the same period last year. In particular, March sales reached about 7.3 trillion won, a 17% increase compared to February. UMC, ranked third in the foundry industry following Samsung Electronics, has also been setting record-high sales for six consecutive months recently.

Researcher Noh Geun-chang of Hyundai Motor Securities said, "Although recent issues such as yield decline in foundry 4nm and the possibility of some strategic clients leaving have been highlighted, the base effect of last year's Austin plant shutdown is also present, so excess growth in Samsung Electronics' foundry division is expected this year."

◆Samsung Electronics Narrowing Gap with TSMC... Strengthened Government Support= So far, Samsung Electronics' semiconductor division growth has been skewed toward the strong memory sector, but the foundry division, which corresponds to non-memory, is expected to determine future growth. By focusing on the much larger non-memory sector, the market share gap between Samsung Electronics and TSMC is gradually narrowing.

According to market research firm TrendForce, Samsung Electronics' global foundry market share based on Q4 sales last year was 18.3%, up 1.1 percentage points from 17.2% in Q3. Although TSMC's share remains overwhelming at 52.1%, it dropped 1 percentage point from 53.1% in the previous quarter, further narrowing the market share gap between Samsung Electronics and TSMC. The estimated sales difference also decreased from 3.09 times in Q3 last year to 2.8 times in Q4.

The industry expects that since President-elect Yoon has announced plans to foster the semiconductor industry by easing regulations and increasing support, Samsung Electronics' pursuit of TSMC in the foundry sector could accelerate.

The Presidential Transition Committee is currently reviewing support measures to secure a semiconductor super gap, including talent development, deregulation, and investment incentives, to realize a 'semiconductor superpower.' As a solution to the semiconductor industry's long-standing manpower shortage, measures under consideration include ▲designation of specialized semiconductor universities to expand student and faculty quotas ▲establishment of semiconductor graduate schools specializing in AI, power, and other fields to increase master's and doctoral experts, and discussions on education for non-majors to switch to semiconductor majors and expansion of contract departments for materials, parts, and equipment (SoBuJang).

In particular, since the transition committee has designated the system semiconductor industry, which Samsung Electronics, SK Hynix, and other Korean semiconductor companies are nurturing as next-generation businesses, as a key support target, budget support to promote new and expanded foundry factories is also expected to follow.

The nomination of Lee Jong-ho, a global semiconductor expert, as the first Minister of Science and ICT in the Yoon Suk-yeol administration is also a point of anticipation for the semiconductor industry.

Lee, the nominee, has served as director of the Seoul National University Semiconductor Joint Research Center, expert committee member of the Korea Research Foundation ICT Convergence Research Group, member of the Ministry of Science and ICT's SoBuJang (materials, parts, equipment) special committee, and member of the Ministry's AI and software advisory committee. He is regarded as an expert suitable for industrial development, having provided policy advice to strengthen Korea's semiconductor technological competitiveness.

This content was produced with the assistance of AI translation services.