Intel's ongoing foundry spinoff initiative presents both opportunities and risks, potentially serving as a critical reference for Samsung Electronics as it formulates future strategies. However, analysts believe that the chances are slim for Samsung to follow Intel's path.
In a recent internal letter, Intel CEO Pat Gelsinger announced plans to split the company's semiconductor foundry and IC design operations. By separating these two major divisions, Intel aims to allow the foundry business to raise funds independently and alleviate customer concerns about its neutrality.
According to South Korean media outlets ET News and Business Post, both Intel and Samsung, as integrated device manufacturers (IDMs), have struggled to secure foundry clients. Unlike TSMC, which solely manufactures chips for customers and does not design its own, Intel's dual role as both a producer and a chip designer (notably of CPUs) has raised concerns about potential technology leaks. Intel's decision to spin off its foundry business highlights its attempt to emphasize independence, positioning it as a key differentiator from Samsung's foundry operations.
In South Korea's semiconductor industry, some believe Samsung should also spin off its foundry business, but this would be a difficult move. The primary challenge is that the foundry business alone may not generate enough revenue to support the massive investments required. If Samsung's foundry business were to weaken, it could mirror the missteps of AMD.
AMD, once a player in the foundry business, spun off its foundry operations in 2009 to form GlobalFoundries after incurring severe losses. AMD has since reduced its stake in GlobalFoundries, and by 2021, Abu Dhabi's sovereign wealth fund, Mubadala, acquired the remaining shares, completing the separation.
Intel, which re-entered the foundry market in 2021, has invested about US$25 billion over the past two years. However, the company has yet to secure a significant customer base, accumulating losses of US$5.3 billion in the first half of 2024. Some analysts believe that while the spinoff could help Intel raise capital, it risks equity dilution, which may eventually make the company a pure customer of the independent foundry entity, akin to the relationship between AMD and GlobalFoundries.
Samsung faces a similar dilemma. The company has made substantial investments in technology and capacity to compete in the advanced process market. However, it has not yet achieved profitability, with annual losses estimated to reach trillions of Korean won.
As a result, South Korean industry insiders believe Samsung cannot rely solely on its foundry business to cover investment costs. It will need continued support from its memory and mobile divisions, making a spinoff unlikely in the near term.
Moreover, Samsung's various business units—such as Memory, System LSI, Mobile eXperience (MX), and consumer electronics—collaborate closely in business and technology. The System LSI division, in particular, provides steady revenue for Samsung's foundry business, making it even harder to separate their operations.
Industry analysts suggest that large-scale IC design companies like Nvidia are looking to reduce their reliance on TSMC. To capture market share in advanced process technology, Samsung must seize the opportunity as Intel restructures its foundry business.
