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Will Samsung Electronics Create Fabless, Foundry Business Divisions?
System Semiconductor Business
Will Samsung Electronics Create Fabless, Foundry Business Divisions?
  • By Cho Jin-young
  • November 23, 2016, 01:30
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Samsung Electronics is expected to keep investing in the system semiconductor sector.
Samsung Electronics is expected to keep investing in the system semiconductor sector.


Samsung Electronics Co. has sought to develop its own technologies for central processing unit (CPU) and mobile application processors (AP), which are semiconductors that determine performance of computers and smartphones, as well as DRAM and NAND flash memories which have relatively simple structures. Considering the fact that its key businesses in the future – components for smart car and smart home – also require a high level of development capabilities, Samsung Electronics is expected to keep investing in the system semiconductor sector.

With the current trend, some insiders of the company are suggesting to reorganize the System LSI division in order to systematically grow the system semiconductor business. They are planning to separate the design and manufacturing sectors in the division and separate or spin off to fabless and foundry business divisions.

Industry sources say that Samsung Electronics will carry out the plan with a reshuffle, including appointment of executives, as early as the end of this year. Currently, Kim Ki-nam, president of the semiconductor business division, also serves as head of the System LSI business.

Samsung Electronics’ System LSI business division is largely divided into four segments; system on chip (SoC) team which develops mobile APs, LSI development team, which designs display driver chips and camera sensors, foundry business team and support team. According to many officials in the industry, Samsung Electronics is now considering forming the fabless division by uniting the SoC and LSI development teams and separating from the foundry business.

The System LSI reorganization plan shows Samsung’s will to grow the business more systematically by dividing its system semiconductor design and manufacturing capabilities. As Samsung Electronics succeeded in mass producing system semiconductor products 10-nanometer process technology for the first time in the world, the company signed a large foundry contract with Qualcomm. It has also decided to expand the manufacturing capacity of its existing foundry in Austin, Texas, by investing more than 1 trillion won (US$849.98 million) by the end of next year.

Samsung Electronics has less dominance in the semiconductor design sector than Qualcomm and Taiwan’s MediaTek. However, the company succeeded in developing its first integrated one-chip solution that combines the application processor and modem, which are considered the flowers of system semiconductors, dubbed the Exynos 8 last year. It uses the chipset in the Galaxy S7. Moreover, there are rumors that Samsung Electronics is seeking to develop its own technologies for graphics processing unit (GPU) whose market is dominated by NVidia and AMD. A GPU, which changes digital signals to images, is also considered as a core component of autonomous vehicles to be appeared in the near future.

Given the characteristics of foundry outsourcing, some say that the reorganization is more needed. At the moment, Apple, Qualcomm and NVidia are major customers of the foundry business team, and they are competitors of its SoC development team. Another official from the industry said, “I am not sure how Samsung Electronics to reorganize the company, but there is an internal consensus that the foundry business and semiconductor design units should not be in the same business division.”