According to the latest survey by TrendForce, TSMC's market share surged to a record high of 71% in the third quarter, firmly maintaining its position as the world's leading semiconductor foundry. Samsung's market share, however, declined by 0.5 percentage points to 6.8%, ranking second, with the gap between the two companies continuing to widen. South Korean media reported on the 14th that Samsung is in talks with AMD regarding 2nm foundry orders, hoping to catch up with TSMC.

Media reports on the 14th indicated that Samsung has not yet become a mainstream semiconductor foundry because its main competitor, TSMC, remains the preferred choice for clients such as Apple, AMD, and even Tesla. Given TSMC's fully booked capacity, Samsung is seizing the opportunity to grab foundry orders.

According to a report by the South Korean media outlet *Sedaily* on the 14th, following Tesla and Apple, AMD is also discussing a cooperation plan with Samsung Semiconductor for its 2nm SF2 process, and the two companies are collaborating on the development of a next-generation CPU, likely the EPYC Venice CPU.

The report points out that Samsung Electronics is actively promoting the production of AMD's latest semiconductors and adopting its next-generation semiconductor foundry process. Analysts say that after Tesla and Apple, Samsung Electronics' successful acquisition of AMD as a client is expected to accelerate its pace in catching up with industry leader TSMC and bring it back to profitability in the semiconductor foundry sector.

Industry insiders revealed on the 14th that Samsung Electronics' Device Solutions (DS) foundry division is discussing a plan to use its self-developed 2-nanometer (nanometer, one billionth of a meter) second-generation (SF2P) process to manufacture semiconductors designed by AMD. To this end, Samsung plans to soon use multi-project wafer (MPW) technology to prototype AMD chips. MPW technology allows multiple companies or institutions to jointly produce designs on the same wafer. The two companies plan to finalize the contract around January next year, at which time they will evaluate whether the process can meet the performance levels required by AMD. However, industry insiders generally believe that mass production is highly likely. The products ordered by AMD are speculated to be its next-generation central processing unit (CPU) chips.

The report states that Samsung's foundry division suffered a loss of approximately 4 trillion won in the first half of this year, but its performance has rebounded after securing orders from large technology companies such as Tesla and Apple. Furthermore, a collaboration with AMD is expected to further solidify the company's growth momentum. An industry insider stated that with excess capacity, TSMC is struggling to meet the demand for new orders. As TSMC's production costs rise, Samsung is becoming increasingly attractive as an alternative wafer foundry.

Samsung's new target for its wafer fabs: profitability by 2027

Samsung Electronics has reportedly set a management target to achieve profitability in its semiconductor foundry business by 2027. The core of this goal lies in securing orders from major tech companies like Tesla, as well as from its Taylor foundry in the US. The focus is on whether the foundry business, once a weakness for Samsung's semiconductor division, can become a new growth engine.

According to a comprehensive report released on the 11th, Samsung Electronics' foundry division has set a target to achieve profitability by 2027. Samsung has shared this management target with its partners and discussed future investment plans.

A senior industry insider familiar with the matter stated, "We are sharing our management target of achieving break-even by 2027, as well as our forecasts for future demand for key materials and components." Another industry insider added, "As far as I know, they have also set a target of achieving a 20% market share (based on sales) by 2027."

With the year-end approaching, Samsung has set this management target to prepare for next year and beyond. The foundry business is a typical order-based business. To ensure stable factory operations, the necessary raw materials and equipment must be prepared in advance. For this reason, Samsung Electronics even developed a two-year business plan.

Samsung Electronics' wafer foundry business is losing money

Samsung Electronics' foundry business has been operating at a loss since 2022. While Samsung has not publicly disclosed the performance of its foundry division, industry insiders estimate that the division loses between 1 trillion and 2 trillion won per quarter. While the memory business fluctuates with the market, the foundry business has been losing money for years, earning it the nickname "bottomless pit." Despite investing heavily in advanced processes, the company has failed to secure a large number of orders.

Samsung's goal of achieving profitability by 2027 is interpreted as a reflection of its assessment of opportunities and confidence in its technological capabilities. This year alone, Samsung Electronics has secured semiconductor foundry contracts from North American tech giants such as Tesla and Apple. Furthermore, orders for artificial intelligence and high-performance computing (HPC) chips are also growing, primarily concentrated in processes with stable yields, such as 4nm, 5nm, and 8nm processes. This marks a significant shift from Samsung Electronics' previous struggle to attract customers due to improved yields.

In its third-quarter earnings report, Samsung Electronics stated, "We secured record orders, primarily focused on advanced processes, including 2nm orders from major clients," and "Our losses have also decreased significantly." Reports indicate that Samsung's foundry business losses fell below 1 trillion won in the third quarter of this year.

Furthermore, increased capacity utilization at its Austin, Texas wafer fab has also contributed to improved profitability. The Austin fab utilizes mature processes, such as 14-65nm, and recently secured new clients, including Qualcomm.

Samsung Electronics is expected to lead the return to profitability at its Taylor plant in the United States. The company has secured support from major technology companies such as Tesla and Apple and is poised to maximize profits through early production.

Samsung Electronics will begin production at the Taylor plant next year. Currently, the company is simultaneously advancing equipment installation and factory construction to accelerate the production process. Equipment construction is expected to be completed by the second quarter at the latest, with full production expected in the third quarter.

Samsung Electronics is also reportedly preparing a second production line (Phase II) at the Taylor plant, which will be significantly larger than Phase I. To expedite production, the company is currently discussing investment and component needs with its partners.

An industry insider analyzed, "After restoring its memory competitiveness, Samsung Electronics is now focusing on a rebound in non-memory areas such as foundry and system LSI," and "the recovery of its foundry business will depend on its ability to acquire next-generation process technologies and stabilize yield rates."

Source: Semiconductor Industry Observer Summary

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