Despite facing difficulties in the deteriorating semiconductor market, Samsung Electronics remains committed to investing in cutting-edge foundry facilities. In contrast, its rival, TSMC, the world's leading foundry company, has opted to reduce its annual facility investment to navigate the market downturn.
Industry sources revealed on May 10 that Samsung Electronics is accelerating the expansion of new foundry lines at its Pyeongtaek Plant 3 (P3), with plans to commence volume production by the fourth quarter of this year. The company is reportedly aiming to conduct an initial trial run as early as May.
Samsung Electronics' aggressive investment in foundry facilities comes at a time when the semiconductor market is experiencing a slump. The industry has been grappling with a significant crisis since the second half of 2022 when global interest rate and inflation hikes resulted in a sharp decline in demand for IT products. Samsung Electronics, like others in the industry, has been affected. In the first quarter of 2022, the company reported a loss of 4.58 trillion won (US$3.44 billion) due to a slump in its memory business, which constitutes 60 to 70 percent of its semiconductor sales. In April, the company officially announced plans to reduce its memory production.
In the first quarter, Samsung Electronics invested 9.8 trillion won (US$7.4 billion) in semiconductor facilities, marking a 24 percent increase from the previous year's 7.9 trillion won (US$5.9 billion). This investment amount was the largest in the semiconductor sector during the same period. Notably, the investment in foundry lines was considerable. An industry insider explained, "Samsung's memory production capacity expansion is slowing down, but its foundry investments are progressing rapidly."
On the other hand, Taiwan's TSMC, which holds nearly 60 percent of the global foundry market, has started to reduce its investment in response to the market situation. The company recorded sales of NT$147.9 billion (US$6.4 trillion) in April, representing a 14.3 percent year-on-year decrease. This marked the second consecutive month of declining revenue following March, prompting the Taiwanese foundry giant to adopt a conservative investment approach. During its first-quarter earnings call in April, TSMC stated that its facility investment would range between US$32 billion and US$36 billion, potentially a 12 percent decrease from the previous year's US$36.29 billion. The actual amount invested was US$9.94 billion, representing a mere six percent increase compared to the previous year. Furthermore, TSMC reportedly plans to delay the introduction of facilities for its most advanced process, the 2-nm foundry process.