Samsung Foundry is facing significant challenges after reporting a loss of nearly $1 billion in the third quarter. The foundry, which is Samsung's chip manufacturing division, has decided to reduce nearly 50% of its production capacity due to a lack of substantial new orders from clients.
The hopes for strong demand from major chip designers have not materialized, prompting the company to take serious measures to minimize losses. As part of the cost-cutting strategy, Samsung plans to temporarily shut down several production lines at its foundry. More than 30% of the 4nm, 5nm, and 7nm lines at the Pyeongtaek 2 and Pyeongtaek 3 plants have already been closed. This reduction in operations is expected to expand to over 50% of the manufacturing plant by the end of the year.
Market estimates suggest that Samsung Foundry could face a loss of 1 trillion Korean won (approximately $725 million) in the third quarter of 2024 alone. The inability to secure large advanced chip orders from clients such as Qualcomm (QCOM), NVIDIA (NVDA, Financial), and AMD (AMD) has significantly impacted the foundry's performance.
