As Samsung Electronics prepares to announce its preliminary third-quarter results, attention is focused on the potential dramatic turnaround of its non-memory sectors, including foundry and system LSI, which have been dragging down overall performance. The surge in high-bandwidth memory (HBM) and increased foundry process utilization are expected to provide a foundation for breaking the cycle of chronic losses, marking a turning point in the semiconductor (DS) division's restructuring.
According to industry sources and analysts, Samsung's estimated revenue for the third quarter is projected to exceed 200 trillion won, with operating profit expected to surpass 108 trillion won. If Samsung achieves an operating profit of 100 trillion won this quarter, it will become the first domestic company to enter the '100 trillion won quarterly operating profit era.'
Particular attention is on whether the non-memory sector, which has been mired in losses, can rebound. Market research firm TrendForce and analysts estimate that operating losses in the foundry-focused non-memory sector will sharply decline to about 777 billion won, nearly halving the deficit. The annual cumulative operating loss for non-memory is also expected to shrink by 41.8% from last year’s 6.74 trillion won to around 3.92 trillion won, indicating a potential reduction of about 3 trillion won in losses.
Some analysts suggest that excluding one-time accounting costs, such as performance bonuses that pressured first-half results, the foundry division could achieve its first substantial quarterly profit since 2022.
The foundry division has faced long-term losses due to declining utilization rates and challenges in securing yields despite significant investments. The annual operating loss for the non-memory sector, primarily driven by foundry, is projected to rise sharply from 2.5 trillion won in 2023 to 5.3 trillion won in 2024, dragging down the overall performance of the DS division. Last year, losses expanded to around 6 trillion won, causing global market share to drop to single digits.
However, the situation has shifted in the second half of the year with the full-scale production of sixth-generation HBM4 4nm base dies. The HBM4 standard requires advanced logic processes for the lowest signal control base die. With HBM4 shipments expected to exceed 60% of total HBM, the foundry is absorbing all the volume, boosting line utilization. Additionally, a price increase of up to 15% for the 4nm process is accelerating profitability improvements.
The global foundry landscape, previously dominated by TSMC, is also experiencing a shift. As TSMC's production capacity reaches saturation, major tech companies are turning to Samsung for alternatives. Following the acquisition of orders from major global tech firms like Tesla, Apple, and Google, Samsung recently signed a memorandum of understanding (MOU) with Broadcom to pursue a collaboration worth $200 billion (approximately 292 trillion won) by 2030, showcasing significant outsourcing achievements.
The restructuring focused on high-performance computing (HPC) is also accelerating. The revenue share from HPC, which was only 5% at the time of the independent division's launch, has now risen to 28%, with a goal of reaching 66% by 2029 and quadrupling the number of clients.
Noh Mi-jung, executive at Samsung's foundry division, stated, "The number of our clients has tripled compared to when the foundry division was first established in 2017. We aim to grow this number to about four times the 2017 level by 2029."
However, the actual production speed of the next-generation advanced 2nm process is expected to be the final turning point for the foundry division's stability.
An industry insider noted, "To narrow the gap with TSMC and secure independent survival in foundry, proving the yield and performance of the next-generation 2nm process is essential. How quickly we can capture production volume for this advanced process will determine the sustainability of our profit structure."
* This article has been translated by AI.
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