Samsung Foundry Nears Escape from Losses

Quarterly revenue came in at $54.2 billion, well above the forecast of $51 billion. Guiding next-quarter revenue to more than $60 billion, it expects data center-driven chip demand to continue.

EPS of $33.40 also beat the market forecast of $31.16, and by guiding next-quarter revenue above $60 billion, it signaled that data center-centered chip demand will persist.

Micron's results are expected to serve as a benchmark for the industry and to have a positive impact on Samsung Electronics and SK Hynix. Growth at HBM and materials/parts/equipment companies is expected to continue on the back of data center demand.

Because Micron's results act as a baseline for the chip industry, Samsung Electronics and SK Hynix are also expected to post positive results, and demand is forecast to remain firm.

Improvements in the 3nm process and application processor (AP) performance drove demand. Once mass production for Apple and Tesla begins in early next year, revenue growth is expected to accelerate further.

Revenue is expected to grow further once mass production for Apple and Tesla begins in early next year.

Foundry yields typically improve over time through trial and error.

Securities market talk suggests Samsung Electronics' 2nm process has reached a 70% yield, but since this is internal information, it is difficult to confirm officially. Still, it is clear that process improvements are continuing.

Mass production at the Taylor fab early next year is the key turning point for revenue growth. From the point when secured orders turn into actual mass production, the value of the foundry business is expected to be fully reflected in the stock price.

The start of mass production at the Taylor fab early next year will be the key turning point for revenue growth, and earnings are expected to materialize in earnest from next year as secured orders lead to mass production.

With the Taylor fab fully operational, Samsung Foundry's customer orders are expected to expand significantly.

Samsung has announced a target to quadruple its customer count from current levels by 2029, and concrete results from this goal are expected to become visible starting in 2025.

Samsung introduced EUV (extreme ultraviolet) lithography four years ahead of TSMC and has accumulated experience solving related problems.

Intel is pursuing a strategy of skipping the 3nm process and moving straight to 2nm, which makes early trial and error likely, whereas Samsung has already completed foundry technology verification with Big Tech companies.

Samsung Foundry is pursuing an 'all-star' strategy that handles everything in one place: custom SoC design, foundry manufacturing, HBM production, and packaging.

For customers, working with a single vendor improves production management efficiency and maximizes the speed of problem resolution.

This integrated solution eliminates logistics steps and is expected to shorten semiconductor production lead times by about 20%.

There is a clear move to secure a stable supply chain against unforeseen external risks such as earthquakes affecting TSMC. Under a multi-vendor setup, customers can strengthen their pricing leverage and cut costs.

Relying on a single vendor such as TSMC could disrupt production if external shocks like earthquakes occur, so second sources like Samsung are gaining importance for a stable supply chain. A multi-vendor system also helps customers improve price negotiating power and reduce costs.

Even when Samsung Foundry held a 19% market share in the past, its utilization rate stayed around 50%.

Samsung's System LSI division's internal orders currently account for more than 50% of total revenue, and if the logic process and internal revenue flow remain stable, it is unlikely to have much trouble escaping losses.

However, in HBM (high-bandwidth memory) a technology gap of more than three years persists, and domestic firms including Samsung Electronics and SK Hynix continue to expand technology investment.

China faces constraints on adopting EUV equipment, which limits its ability to catch up with domestic firms in leading-edge ultra-fine process technology.

Accordingly, China's semiconductor technology is unlikely to overtake domestic companies within five years.

As demand for HBM and AI chips grows, MLCC and FCBGA makers are expected to benefit.

Original equipment firms such as SK Hynix and Samsung Electronics will benefit first, but this positive impact is expected to gradually spread to materials, parts, and equipment (sobujang) companies.