Samsung Electronics’ semiconductor division is temporarily shutting down production lines at its foundry (contract manufacturing) facilities to reduce costs. Analysts estimate the chipmaker’s foundry business recorded losses amounting to 1 trillion won in the third quarter, prompting the company to take cost-cutting measures by deactivating parts of its production lines.
Samsung Electronics has already shut down over 30% of its 4nm, 5nm, and 7nm foundry production lines at Pyeongtaek Line 2 (P2) and Line 3 (P3) and plans to expand the shutdown to about 50% of its facilities by the end of the year, according to sources familiar with the matter on Nov. 1. The company intends to halt operations gradually while monitoring customer orders.
The decision reflects Samsung’s effort to reduce operational costs. The foundry division has struggled to secure large-scale orders from global tech companies like Nvidia, AMD, and Qualcomm.
Rather than leaving production lines running at low utilization rates, sources report that Samsung has decided that turning off the power to reduce electricity costs would be more efficient. “Samsung has publicly indicated it would keep the facilities on and lower utilization, but in reality, the company is gradually shutting down lines,” said an industry insider who requested anonymity. “The current plan is to reduce operations to around 50% by the end of the year.”
Weaker-than-expected orders from Chinese fabless companies, which previously accounted for a substantial portion of Samsung’s 4nm and 5nm process volumes. U.S. trade restrictions on China’s semiconductor industry have caused some Chinese fabless companies to delay projects before the U.S. presidential election.
Some experts are concerned that Samsung’s cost-cutting measures could undermine its competitiveness in the foundry sector.
“As Samsung Electronics focuses on memory chips, the backbone of its semiconductor business, the foundry business has been pushed to the back burner,” said Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University. “With production facilities ceasing operations, the growing gap with TSMC could reach a point where it becomes exceedingly difficult for Samsung to catch up.”
