The manufacturer of memory chips is benefiting from the global chip crisis.
(Photo: Reuters)
Tokyo The Korean electronics company Samsung Electronics wants to massively expand the contract manufacturing of chips, the so-called foundry business. This was announced by a manager of the semiconductor division on Thursday at the presentation of the quarterly figures. “We plan to triple our capacities by 2026 in order to meet our customers’ needs as well as possible,” said Han Seung Hoon.
The actual expansion is already influenced by the new chip policy of the global economic powers. Han explained that, on the one hand, the main domestic plant in Pyeongtaek is to be expanded. On the other hand, the group is considering building a new plant in the USA.
This announcement is part of Samsung’s strategy to move into the foundry business through its previous strength of memory chip production. The market is competitive, the challenge is great. Because the Koreans not only have to assert themselves against competitors such as the US chip manufacturer Intel, but also against the largest contract manufacturer of chips, TSMC.
TSMC has a big lead and is expensive to catch up. So far, the Taiwanese have a world market share of 53 percent in foundries, while Samsung is in second place with only 17 percent.
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Korea’s largest corporation has therefore increased its planned investments for the next three years to 240 trillion won (177 billion euros) this year. Most of the money goes into the technological race to catch up with TSMC. The Taiwanese have already started producing chips with structures three nanometers in size. Samsung wants to follow suit next year.
The group currently earns the necessary capital with its memory chips. In the third quarter, Samsung’s sales rose by 9.4 percent to the new quarterly record of 73.98 trillion won, the equivalent of 58.9 billion euros, driven by high prices for memory chips. Meanwhile, operating profit rose 28 percent to 15.82 trillion won, the second-highest profit in the company’s history. Net income even climbed 31.3 percent to 12.29 trillion won.
Investors fear falling prices
Semiconductors contributed around two thirds of the profits. However, the profit margin of the foundry business has so far been significantly lower than that of the memory chip division. The former star of the group, the mobile phone division, also revived with the introduction of two new foldable smartphones, the Galaxy Z Fold 3 and Galaxy Z Flip 3.
Exchange rate gains also improved profitability. However, profits in entertainment and household electronics have fallen due to rising material costs and freight rates.
Investors now fear that the prices for memory chips and thus Samsung’s profit could fall from the current quarter. The market researcher Trendforce, for example, expects that the prices for Dram memory chips could fall by up to 20 percent in the current quarter.
But Samsung believes the demand for servers and computers will remain stable thanks to the introduction of new computer chips and increased investment in data centers. However, the group warns of possible bottlenecks in components for chips and other disruptions in the supply chain.
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