Foundry Market, Samsung's 2nd Place Position Threatened by Intel's Entry

"Mid- to Long-Term Strategy Changes Needed to Maintain 2nd Place Position"

[Asia Economy Reporter Park Sun-mi] Concerns have been raised that Samsung Electronics' position as the world's second-largest foundry market player could be at risk.

On the 16th, Daol Investment & Securities stated in a semiconductor report, "The technology and capital expenditure (CAPEX) gap between Taiwan's TSMC and Samsung Foundry is widening," adding, "Samsung Foundry's second-place position is in a precarious situation."

Analyst Kim Yang-jae explained, "Regarding CAPEX, TSMC increased from $17 billion in 2020 to $40 billion in 2022, and Intel, a new market entrant, also increased CAPEX from $14 billion to $26 billion. Meanwhile, Samsung Electronics' CAPEX only rose from $10 billion in 2020 to around $10-13 billion in 2022."

It is suggested that Samsung needs a mid- to long-term strategic shift to maintain its second-place foundry position. Analyst Kim added, "In the high-end market, the technology and production capacity gap with TSMC has further widened, and Intel's entry is threatening the second-place position. Particularly, in the mature semiconductor market, while Samsung Foundry investment is absent, expansion by Chinese companies is accelerating."

Meanwhile, TSMC recently reported first-quarter results that exceeded market expectations. First-quarter revenue increased by 35.5% year-on-year to NT$491.1 billion (approximately KRW 20.8 trillion), and operating profit rose by 48.7% to NT$223.8 billion (approximately KRW 9.4 trillion).

Samsung Electronics announced a record-breaking preliminary performance exceeding KRW 77 trillion in the first quarter of this year, with foundry division sales estimated to be around KRW 7 trillion. Although this is about one-third of TSMC's level, Samsung Electronics is also expected to have seen significant first-quarter sales growth due to the ongoing global foundry supply shortage driving up foundry service prices.

Currently, the foundry industry has become able to increase profitability by raising unit prices due to fabless (semiconductor design-specialized) companies placing orders with advance payments. Global major fabless companies are lining up to entrust production to TSMC and Samsung Electronics, who dominate processes below 10 nm, while small and medium fabless companies are being left behind due to failure to secure foundry partners.

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

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