Samsung Foundry Anticipates Significant Growth by Year-End Fueled by Major Tesla Partnership and Increased Operating Rates

Samsung Foundry is poised for significant growth in the upcoming quarters, demonstrated by a remarkable increase in the utilization rates of its production lines.

Anticipated Rebound in Samsung’s Chip Business Due to Rising Adoption of Mature Nodes

After facing several challenging quarters, Samsung’s foundry division appears to be regaining its footing. Substantial investments in technology did not yield the anticipated returns, resulting in considerable operating losses. However, a recent report by Chosun Biz indicates a resurgence, particularly in the production of mature nodes such as those at 4nm and below. The good news is that while the company has struggled with older manufacturing processes, forecasts suggest a significant reduction in annual losses going forward.

Utilization rates for critical nodes, including 4nm, 5nm, and 8nm, have risen above 50%.This trend is primarily driven by Samsung’s contracts with Nintendo, as well as advancements in their next-generation High Bandwidth Memory (HBM4) process, which employs the 4nm process for its base die. Additionally, demand is being bolstered by Samsung’s System LSI division and an uptick in crypto-mining application-specific integrated circuits (ASICs) being tailored for Chinese clients.

Samsung requires more time to stabilize its 2nm yields

Looking ahead, Samsung Foundry is aggressively targeting a reduction in its financial deficits. Notably, following a landmark $16.5 billion agreement with Tesla for AI6 chip production, the firm anticipates a substantial influx of orders from various sectors. Samsung is strategically seeking to secure 2nm fabrication orders from major players like NVIDIA and Qualcomm. The recent approval from Elon Musk’s Tesla not only positions Samsung favorably but also enhances its likelihood of attracting additional clientele. Although it will still require time to reach parity with competitors such as TSMC, indications show that Samsung is on a promising trajectory.

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