Having reported an operating profit of 3.86 trillion won in the third quarter, which marked a 40% decline from the previous quarter, the company is said to be aiming to scale back operations to about 50% by year-end, amid growing concerns on its progress in developing advanced nodes.
The report said that Samsung’s semiconductor division is temporarily closing down some production lines at its foundry facilities in response to weak orders from US tech companies and Chinese fabless firms.
According to sources, Samsung has already closed more than 30% of its 4nm, 5nm, and 7nm production lines at Pyeongtaek Line 2 (P2) and Line 3 (P3) and, in addition, it is said to be carefully keeping an eye on customer orders, and planning to gradually halt operations, possibly shutting down approximately 50% of its facilities by year-end.
Though the financials of its foundry business have not been disclosed separately, analysts project that the chipmaker’s foundry business suffered losses of around 1 trillion won in the third quarter, leading the company to implement cost-cutting measures by shutting down portions of its production lines.
Instead of maintaining production lines at low utilisation rates, reports suggest that Samsung has decided to shut down operations to save on costs.
The report attributes Samsung’s decision to weaker-than-anticipated orders from Chinese fabless firms, which had previously represented a significant share of Samsung’s 4nm and 5nm production volumes. US trade restrictions on China’s semiconductor sector have led some Chinese fabless companies to postpone their projects ahead of the US presidential election.
If the report is accurate, it does suggest that the company’s technological gap with foundry leader TSMC may be widening and that Samsung seems to be prioritising memory chips, while the foundry division has been sidelined.
However, it should be noted that Samsung has said that it plans to leverage the 2 nanometer (nm) Gate-All-Around (GAA) process to win new clients and is aiming for mass production of 2nm in 2025 and 1.4nm by 2027.
