Samsung’s semiconductor manufacturing unit, Samsung Foundry, has entered a period of recovery after experiencing financial and operational difficulties over the past few years. The company’s rise was largely driven by the $16.5 billion agreement with Tesla, which led to a surge in activity not seen in a long time.
Samsung Foundry Enters a Recovery Period
According to information reported by Chosun Biz, Samsung Foundry’s capacity utilization rate for its 4nm, 5nm, and 8nm production processes has exceeded 50%. This rate indicates that a critical threshold has been crossed, given the company’s recent low production demands.
This increase in capacity utilization is not solely driven by Tesla. Chips produced for Nintendo, demands from the System LSI department, HBM4 memory projects built on the 4nm process, and crypto mining ASIC designs for Chinese customers also contributed to this growth.
Samsung Foundry has faced low revenues in recent years despite its advanced technology investments. Reliance on outdated production processes prevented costs from turning into profits and left the company facing operational losses.
However, with increasing order volume and higher production volumes, this situation appears to be changing. A significant reduction in the company’s annual loss is expected, and this decline is expected to accelerate further by the end of the year.
The Tesla agreement, the main driver of the recovery, covers AI6 chip production focused on artificial intelligence. This development impacts not only the company’s production lines but also its position in the market.
Large-scale orders from Tesla have made Samsung a potential supplier for 2nm production processes to giants like Nvidia and Qualcomm. While it is not yet considered to be at a level that can directly compete with TSMC in this area, Samsung now has the opportunity to capture a larger share of the market.
The fact that previously loss-making lines are now back online and that investments in next-generation technologies are starting to translate into concrete orders suggests that the transformation process Samsung Foundry is undergoing may be permanent.
