Samsung Electronics will beef up its contract-based chip manufacturing foundry business to keep up profit next year amidst softening in memory prices due to a supply glut in the global market.
DRAM business, a major cash cow for Samsung Electronics, now accounts for 85 percent of the tech giant¡¯s revenue in the semiconductor sector. A price collapse may deal a harsh blow to its entire business. But it is hopeful that its reinforced foundry business could offset the losses as demand for on-demand chips remains strong due to ever-growing big data and artificial intelligence applications.
"Samsung Electronics already completed performance validation for 3 nano class process technology and is further refining the technology with a goal for mass production in 2020,¡± said Eun Seung Jung, head of Samsung¡¯s foundry business at the International Electronic Devices Meeting (IEDM) held on Monday.
The company¡¯s priority task is to narrow the gap with Taiwan¡¯s Taiwan Semiconductor Manufacturing Company (TSMC), a pure play industry leader, by further refining its 3 nano class process-on-chip technology.
Samsung Electronics achieved the world¡¯s first commercial production of 32, 14 and 10 nano class chips for its foundry clients, but it was outpaced by TSMC in 7 nano.
"Keeping pace with the era of the fourth industrial revolution, we will expand the scope of our foundry business from simple contract manufacturing to customized design, packaging and testing business,¡± he stressed.
Samsung Electronics has been investing heavily in the foundry business to achieve its goal to generate more than $10 billion from the contract-based chipmaking, twice more than last year¡¯s $4.6 billion. Foundry is a business that manufactures and packages chips upon client orders. Although unrivalled in commercial chips, Samsung is ranked fourth in customized chipmaking.
Earlier this year, it has broke ground for a foundry in Hwaseong at a cost of 6 trillion won ($5.6 billion) with an aim to start mass-production of 7 nano chips in the second half of next year.
If it makes $10 billion in sales, it would be second after TSMC.
By Lee Sang-duk and Minu Kim
[¨Ï Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]