'China also increased'... Samsung's Foundry Q3 Revenue Alone Runs Against the Trend (Comprehensive)

Top 5 Companies' Q3 Sales Up
Only Samsung Electronics -0.1%

Before Galaxy S23 Launch
Also Burdened by Exynos Quality Controversy

Samsung Electronics Hwaseong Campus view. (Photo by Samsung Electronics)

[Asia Economy Reporter Moon Chaeseok] Samsung Electronics, the world's number one memory company but struggling due to the economic cycle, is also having a hard time building its system semiconductor portfolio. In the foundry (semiconductor contract manufacturing) market, where it ranks second, it is being chased even by the third place, and in the mobile application processor (AP) sector, it is losing market share competition due to quality controversies.

According to Taiwanese market information company TrendForce on the 20th, all of the top 1 to 6 foundry companies except Samsung Electronics saw increased sales in the third quarter compared to the previous quarter. Taiwan's TSMC, ranked first, recorded $20.163 billion (about 26.293 trillion KRW), up 11.1%; Taiwan's UMC, ranked third, increased by 1.3% to $2.479 billion (about 3.233 trillion KRW); US-based GlobalFoundries, ranked fourth, rose 4.1% to $2.074 billion (about 2.704 trillion KRW); China's SMIC, ranked fifth, increased 0.2% to $1.970 billion (about 2.487 trillion KRW); and China's Hua Hong Group, ranked sixth, grew 13.6% to $1.2 billion (about 1.565 trillion KRW). Samsung Electronics recorded $5.584 billion (about 7.235 trillion KRW), down 0.1%.

Samsung is competing fiercely with companies from Taiwan, the US, and China. Although the foundry market is considered to have strong long-term growth momentum due to increased demand for high-value-added semiconductors used in artificial intelligence (AI) and 5G communications, Samsung faces challenges because its fabless ecosystem is less developed compared to Taiwan and the US. It is currently working on securing fabless customers such as Qualcomm and Nvidia and improving yield rates while focusing on expanding its scale.

It is also positive news that equipment is expected to be installed around January next year at the $17 billion (about 21.7 trillion KRW) fab being built in Taylor, Texas. Baek Gilhyun, a researcher at Yuanta Securities, said, "There is a high possibility that the business value of the foundry sector will be highlighted from the second half of next year," adding, "It is necessary to pay attention to the completion of the new Taylor fab in the mid to long term."

The situation in the mobile AP sector is even more serious. The MX (Mobile Experience) division plans to release the Galaxy S23 in February next year, but it mainly uses Qualcomm's Snapdragon rather than Samsung Electronics' DS (Device Solutions) division's Exynos. If the Galaxy S23 follows the Galaxy Z Fold4 and Flip4, released in August, by mainly using Snapdragon, the momentum of the DS division will inevitably weaken. The quality of Exynos became a burden after the 'Game Optimizing Service' (GOS) incident in February, right after the Galaxy S22 launch, where other functions were forcibly restricted during game execution.

According to market research firm Counterpoint Research, the global AP market share was 4% in the fourth quarter of last year, down 3 percentage points from a year earlier.

In response, Samsung Electronics created a dedicated AP development organization within the MX division and appointed Vice President Choi Wonjun, who has experience working at Qualcomm, as the head of the AP Solution Development Team. This is to develop a 'Galaxy-exclusive chip.' Regarding this, Samsung Electronics said, "We are developing a new Exynos product in line with the launch of next-generation (set) products," but remained cautious in their comments.

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