Advice on Foundry Business
Samsung Securities said in its recent report that Samsung Electronics needs to diversify its foundry business portfolio in the non-memory chip sector with its DRAM sales having decreased for the second consecutive quarter.
“Macroeconomic conditions are deteriorating and Samsung Electronics’ DRAM capacity utilization is falling, which means consumers’ disposable income is decreasing and its inventory burden is increasing,” it said, adding, “Besides, global logistics issues are poised to lead to canceled orders and further declines in sales and capacity utilization.”
According to market research firms, Samsung Electronics’ DRAM sales were US$10.343 billion in the first quarter of this year, down US$9 million from the previous quarter. The sales decreased for two quarters in a row after having reached US$11.53 billion in the third quarter of 2021. This has to do with the global DRAM price, which dropped 9.5 percent and 8.1 percent in October last year and January this year, respectively.
Samsung Securities also pointed out that Samsung Electronics needs to consider building foundries in the United States and Europe. “At present, 38 percent and 37 percent of the sales of the foundry arm of Samsung Electronics are derived from Qualcomm and Samsung LSI, respectively,” it said, adding, “When it comes to foundry, contact with clients is very important and more localization effort is necessary.”
According to Samsung Securities, the number of TSMC employees is approximately 60,000 whereas that of the foundry arm of Samsung Electronics stands at 20,000 or so. In addition, the numbers of R&D workers of Samsung Electronics and TSMC are about 3,000 and 10,000, respectively. “Samsung Electronics also needs to consider spinning off its foundry arm and listing it in the United States,” it went on to say.