Samsung will halve the costs of its contract division for the production of chips

The status of the largest supplier of semiconductor products does not fully please the South Korean corporation Samsung Electronics, since it is still achieved mainly through sales of memory chips, the prices of which fluctuate quite noticeably, every now and then plunging the giant into crisis. At the same time, Samsung is preparing to allocate half as much money this year for the contract business of producing chips as last year.

Image Source: Samsung Electronics

At least, such changes are reported by the Korean resource SEDaily, explaining that last year Samsung spent about $7 billion on contract business, and this year the amount will be cut to $3.5 billion. Moreover, in the period from 2021 to 2023 we are talking was about amounts three or four times larger compared to the current $3.5 billion. As specified, investments in the contract business have been reduced due to the lack of large orders for the production of chips for third party clients. The company in Pyeongtaek, which produces chips using technologies in the range from 7 to 4 nm, as a result, its utilization rate dropped by more than 30%.

This year, Samsung will focus its investments in the contract business at S3 in Hwaseong and P3 in Pyeongtaek. In the first case, part of the lines for the production of 3nm chips will be transferred to the production of 2nm products. In the second case, we are talking about installing a pilot line for the production of chips using the 1.4 nm process technology. By the end of the year, it can produce up to 3,000 silicon wafers with 1.4-nm chips per month. In addition, Samsung will spend some of the amount to equip its new facility in Texas. The company’s priority for this year will be to increase the efficiency of using existing production facilities.

For comparison, the Taiwanese company TSMC, which also hopes to launch serial production of 2nm products this year, has included $38 to $42 billion in capital expenditures in its plan. About 70% of this amount will be spent on advanced technical processes, which now provide a proportional share of the company’s revenue.