Smartphone Slowdown
Samsung Electronics’ foundry business has been in the red due to slowing global demand. It is blamed mainly on a slowdown in the smartphone industry, which accounts for a large share of sales in the foundry business.
According to sources in the foundry industry on July 11, Samsung Electronics’ Foundry Division, including the System LSI Division, is estimated to have posted sales of 4.437 trillion won (US$3.440 billion) and an operating loss of 710 billion won in the second quarter (April-June) of this year.
Its sales were down by 35.6 percent from 6.892 trillion won the previous year and its operating profit turned into a loss compared to 608 billion won in 2022. Samsung’s foundry division is estimated to have posted a loss of 299 billion won in the first quarter of this year, with its losses widening in the second quarter.
The decline in Samsung’s foundry business is largely due to a delayed recovery in the smartphone industry. This is because overall demand for smartphones has been sluggish, and corporate customers have been unexpectedly slow to deplete their parts inventories. In particular, the corporate customers are reducing their inventories of image sensors and display drive ICs (DDIs), which are the main products. A decrease in customer orders has led to a decline in sales at the System LSI Division, while the foundry division also faced increased cost burdens due to a lower production line utilization rate, resulting in a decline in profits.
Samsung succeeded in the world’s first volume production of 3-nm chips. Its 3-nm ultra-micro fabrication process also began to be reflected in the company’s business results in the second quarter but it did not prevent the company’s deficits from widening. This is because it is difficult to secure customers due to an economic downturn and high production costs.