Samsung's foundry business is signaling a powerful comeback, setting an ambitious internal target of over KRW 2 trillion in operating profit for 2027.
After years of struggling to catch up to its main rival, TSMC, this goal now seems within reach, thanks to a convergence of positive factors. So, what has changed to make this turnaround story so credible? The answer lies in three key developments.
First, their technology is finally hitting its stride. For a long time, Samsung faced challenges with the yield of its most advanced manufacturing processes. However, recent reports indicate that its 2nm process yield has improved significantly, crossing the crucial 50-60% threshold. This milestone is vital because it proves to potential customers that Samsung can reliably and efficiently produce their most complex chip designs.
Second, powerful demand is lining up, largely driven by the AI boom. Samsung has reportedly secured a multi-billion dollar deal to produce advanced AI chips for Tesla at its new factory in Taylor, Texas. Beyond external clients, Samsung's own memory division is becoming a major internal customer. Its new HBM4 memory, which is essential for AI accelerators, requires a sophisticated logic die that is manufactured using advanced foundry processes. This creates a stable, built-in demand that helps keep factory utilization rates high.
Third, the global landscape is shifting in Samsung's favor. The U.S. government is providing up to $6.4 billion in funding under the CHIPS Act for the Texas plant, which significantly reduces the financial risk of such a massive investment. At the same time, industry leader TSMC has been increasing its prices for advanced chips. This price pressure is prompting major designers like AMD and Qualcomm to seriously evaluate Samsung as a viable second source, an option that was less attractive when Samsung's yields were inconsistent.
Taken together, these factors create a clear path to profitability. With improving technology, secured demand from AI leaders and its own divisions, and a favorable geopolitical and competitive environment, Samsung's foundry business is well-positioned to transform from a loss-maker into a second powerful profit engine for the company.
- Foundry: A semiconductor manufacturing plant that produces chips designed by other companies. Instead of designing its own chips, a foundry acts as a contract manufacturer.
- Yield: In chip manufacturing, this refers to the percentage of functional chips produced out of the total number of chips on a single wafer. A higher yield means lower costs and more efficient production.
- HBM4 (High Bandwidth Memory 4): The fourth generation of a high-performance memory standard used in high-end GPUs and AI accelerators. It stacks memory chips vertically to achieve very high data transfer speeds.