chips that cost Samsung very expensively

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Despite an investment of several billion dollars, Samsung has still not managed to rise to the level of the largest companies in the design and production of electronic chips, like TSMC. However, there is no question of abandoning this activity.

Samsung excels in several markets, particularly that of memories (DRAM and NAND). Diversification in the logic chip business, such as processors for example, therefore made sense. In 2019, the president of the Korean group, Jay Y. Lee, announced his vision: to overtake the world leader TSMC by 2030.

Samsung still far from TSMC

And to achieve this, there are no miracle cures: we must go to coal and put chip production factories at the service of all manufacturers, including competitors. TSMC has several heavyweight clients, including Apple and Nvidia. As early as 2017, Samsung began to separate its foundry activity (the manufacturing of semiconductors) from System LSI, the group which designs these same chips, such as the Exynos for example.

The idea was to reassure manufacturers who might be reluctant to turn to such a rival to equip their smartphones. By separating these two activities, the foundry theoretically cannot pass on secrets to the teams responsible for developing chips for Samsung’s phones, at least that is the promise. But clearly, this is not enough to make it a viable business.

While the company does not provide specific figures regarding the financial and commercial performance of these two entities, analysts interviewed by Reuters calculated losses of $2.4 billion in 2023. And the estimates for 2024 are hardly more flattering with losses of $1.5 billion.

However, Samsung does not intend to completely separate the chip manufacturing activity from the design activity. Jay Y. Lee told the news agency, despite the billions in losses that are dragging down the entire group’s results. “ We want to develop these activities “, he says. “ (We are) not interested in a split “. Samsung fails to attract large customers capable of placing large orders; This does not prevent the company from increasing the construction of new production units, in South Korea as in the United States.

This strategy is also the one followed by Intel, which is very far from giving the expected results. So much so that Arm and Qualcomm would have views on the former world number 1 in electronic chips. Samsung is not at all in the same situation as Intel, although the difficulties are similar when it comes to producing chips for competitors.