www.businesskorea.co.kr, May. 22, 2025 –
The possibility of separating the foundry business within Samsung Electronics’ semiconductor division is resurfacing, following Samsung Biologics' announcement on May 22 to fully separate its contract development and manufacturing (CDMO) business and biosimilar operations. This is due to the persistent concerns from client companies about conflicts of interest, as Samsung's semiconductor division also operates both design and production under “one roof.” Some analysts suggest that separating the foundry business could be a breakthrough to escape the swamp of chronic deficits.
According to industry sources on May 22, the conflict of interest issue, which led to the spin-off of Samsung Biologics, is also a concern for the Device Solutions (DS) division, responsible for Samsung’s semiconductor business. Samsung Foundry manufactures semiconductors using a 3nm (nanometer, one billionth of a meter) cutting-edge process and is preparing for 2nm mass production within the year. Although it falls short of TSMC, the world’s largest foundry, it holds a considerable competitive edge as the second-largest player in the global foundry industry, yet it constantly struggles with securing orders.
While Samsung Foundry’s technological capabilities and yield issues are contributing factors, industry analysts primarily attribute the problem to conflicts of interest. Since the DS division also houses System LSI, which is responsible for semiconductor design, big tech companies specializing in design, such as Apple, Nvidia, and Qualcomm, are concerned that their design know-how might leak to System LSI if they outsource their work to Samsung Foundry. Therefore, separating the foundry is considered a potential solution to address the order drought. The separation of the foundry could also provide an opportunity to escape from trillions of won in deficits. There has been frequent speculation in the financial investment industry about Samsung Foundry listing on the U.S. Nasdaq after its separation. Some believe that by alleviating the conflict of interest issue and raising funds in the global market for large-scale investments, the company could not only escape its deficit structure but also secure substantial growth momentum.
The System LSI business unit has been undergoing a thorough review by the Samsung Global Research Management Diagnosis Office since the beginning of the year due to continuous technological setbacks and worsening profitability. According to industry sources, the management diagnosis is nearing completion, and the fate of the business unit is expected to be decided soon. The direction of the foundry separation will likely become clearer once the DS division’s organizational restructuring, including the decision on the System LSI business unit, takes place.