BusinessKorea cited sources in the foundry industry saying that Samsung Electronics' foundry division, including the System LSI Division, is estimated to have posted sales of KRW 4.437 trillion (US$3.440 billion) and an operating loss of KRW 710 billion in the second quarter (April-June) of 2023. This means that Samsung's Q2 loss in the foundry business is doubling the level of 1Q23 (KRW299 billion or US$230 million).
The total losses of Samsung's foundry division, including the System LSI business, in the 1H23 is close to KRW1 trillion, or US$780 million.
According to industry sources, it is estimated that the 2Q23 Samsung foundry division revenue is around KRW4.4 trillion, or US$3.44 billion, compared with KRW6.9 trillion during the same period in 2022, a decrease of 35.6%. Revenues in 1Q23 totaled 4.8 trillion, meaning its operations in Q2 faced a quarterly decrease of 7.8%.
Although Samsung's official financial report does not disclose separate data for the foundry division's revenue and profits nor other operations performance data, the aforementioned industry disclosure figures are not too far off from the final revenue data of Samsung semiconductor and device solutions (DS) department and memory business released in the past few quarters. Thus its reference value is quite high.
The Korean media reports directly pointed out that due to the slowdown in global demand, Samsung Electronics' foundry business has been in the red, mainly due to the weakness of the smartphone market, as it takes up a large proportion of Samsung's foundry division revenue.
Taking 1Q23 TSMC's revenue as an example, the proportion of smartphone chips accounts for about 34%, and revenues contributed by this sector also suffered a drop of nearly 30% quarter-on-quarter, reflecting that TSMC is not immune to the impact of the weak smartphone market.
However, the good news is that HPC orders from data center servers, AI chips, etc., accounted for 44% of the revenue, and even in the midst of the downturn, the quarterly decline in HPC was only about 10%.
The report pointed out that the smartphone industry's recovery has been slow. It is also the main reason for the decline in Samsung's foundry results, due to the downturn in demand for smartphones, as well as the slower-than-expected pace of customer inventory depletion.
It is worth noting that the enterprise customers of the system LSI department are also destocking their CMOS image sensor (CIS) and display driver IC (DDI) inventory. Since those are the main sources of revenue for the system LSI department, the reduction of customer orders also led to a decline in sales. Due to the lower utilization rate of the foundry department's wafer fab capacity, and facing an increased cost burden, profits have declined considerably.
