Samsung Foundry is grappling with a significant downturn as it faces a 40% drop in quarterly profitability, posing considerable challenges for the technology behemoth. Despite the turbulent economic climate within Samsung’s DS division and disappointing results from the HBM sector, the company holds a bullish outlook for its future, hinting at a potential rebound.
According to the firm’s third-quarter 2024 earnings report, the semiconductor division reported an operating profit of KRW 3.86 trillion, falling short of the KRW 4.2 trillion expectations. This shortfall largely results from setbacks in the HBM business, as Samsung could not fully capture NVIDIA and other AI tech leaders as customers. While the company’s overall year-on-year revenue rose by 17.35% to KRW 79.1 trillion, these earnings have not significantly boosted market confidence due to the underperformance in the semiconductor sector.
Samsung struggled in its HBM business, particularly against competitors like SK hynix. Despite undergoing extensive “HBM sampling” with NVIDIA, Samsung failed to secure them as a customer, contributing to the division’s ongoing challenges. However, Samsung’s future HBM efforts show promise, as the company plans to start mass production of HBM3E this quarter, potentially making up over 50% of total HBM sales in the fourth quarter. Additionally, Samsung aims to supply NVIDIA by Q4, although production delays have been attributed to qualification issues, with HBM4 expected by the second half of 2025.
The company has expressed significant optimism regarding its foundry business’s future. Recent advancements in its “cutting-edge” nodes, including the 2nm GAA technology, signify potential success. Samsung has begun distributing “SDK kits” to potential partners, paving the way for mass production by FY 2025. However, ongoing yield rate challenges are yet to be fully resolved, affecting the adoption of this advanced process.
Although current circumstances are less than ideal for Samsung, its Q3 2024 results underscore a vision for ambitious growth. Should the company effectively implement its strategic plans, an economic recovery could be on the horizon as it moves into the latter part of the year and into FY 2025.
