Samsung Foundry may split from Samsung – Advantages and Challenges

Samsung Foundry may become a separate firm in 3 to 5 years. The company has established a task force within the business that is responsible to sequentially split the Samsung Foundry division from Samsung Electronics.

Korea’s TopDaily reports that Samsung Foundry may split from Samsung Electronics. The task force has three to five years to complete a smooth spin-off. With this strategic move, the company aims to attract major clients.

Samsung Foundry Spin-off

Samsung launched the Foundry division as an independent business in 2017. Since then, the company has been focussing on ambitious investments to foster business growth. However, the division is set to post significant losses this year.

The market has long demanded that Samsung spin off its Foundry business. Industry insiders believe that splitting the foundry business would be beneficial for attracting clients, as greater independence would help secure customer contracts.

Should Samsung spin off the Foundry division?

Separating Foundry from Electronics would be quite challenging for Samsung. The company will be requiring massive funding to spin off the Foundry business. The funding from other firms will significantly affect their performance and growth rate.

Reports say tens of trillions of KRW (billions of dollars) investment will be needed for Samsung Foundry. That said, it will be more advantageous for the foundry to remain under Samsung’s umbrella and secure growth.

How separation will benefit?

After TSMC, Samsung Foundry is the second-largest semiconductor foundry in the world. The company is involved in both memory and system semiconductors. Additionally, it also operates in Foundry and Fabless businesses.

Meanwhile, these advantages are somehow backfiring Samsung Foundry. It is speculated that foundry clients may find it burdensome to entrust semiconductor designs—considered their trade secrets—to Samsung Elec and System LSI.

System LSI division runs a fabless business focused on 5G and AI chips, which competes to some extent with fabless companies like Qualcomm, NVIDIA, and Apple, which could be retained by Samsung Foundry after separation.