Samsung produces chips for external customers at a loss

Samsung Electronics’ high operating profit performance in the second quarter, some sources believe, masked the unsightly performance of the company’s contract division. In their opinion, the second quarter was unprofitable for Samsung’s chip business that is not related to the memory segment. The contract division could lose up to $220 million.

Image Source: Samsung Electronics

Let us recall that Samsung’s total operating profit in the second quarter increased 15 times year-on-year to $7.6 billion, and revenue increased by 23% to $53.5 billion. The company does not divide these reports into each of the divisions, but noted that based on the results In the second quarter, active profit growth occurred due to high demand for HBM, classic DRAM chips and solid-state memory for server SSDs. The contract division of Samsung’s semiconductor business was not mentioned in this context, so Taiwanese media, citing South Korean sources, reported that the company could incur operating losses of up to $220 million in the contract business.

Samsung Securities estimates that outside the memory market, the company’s semiconductor business suffered an operating loss of $346 million in the second quarter. The harmonious development of Samsung’s contract chip business is believed to be hampered by the lack of a sufficient number of large customers. The high demand for TSMC’s services in the production of 3nm chips, on the one hand, opens up certain opportunities for Samsung. On the other hand, Samsung needs to sharpen its advanced technological processes to meet the needs of the high-performance computing segment. For example, Samsung has yet to introduce reverse-side power supply technology, and if all goes according to plan, it will do so by the time it masters the 2nm process in 2025.