Samsung May Reorganize Semiconductor Division Following Performance Audit

Samsung’s semiconductor business has been struggling lately as it has not been able to attract major clients. The Korean firm’s System LSI division designs chips, while the Foundry division handles the manufacturing process. However, there are concerns within the industry, as some chip design companies see this structure as a potential data risk. As a result, the Foundry division may find it difficult to secure deals with fabless companies. So, there’s a possibility that the Korean firm may make Foundry a completely independent business unit in the future.

Audit outcome may push Samsung to rethink semiconductor structure

Earlier this year, Samsung Global Research’s Management Diagnosis Office started an audit of its System LSI division due to poor performance and low profits. Now, Korean media reports that the team has almost completed the review process, and the outcome will decide the future of the chip business units. If the outcome of the audit points to reorganization of the Device Solutions (DS) division, responsible for the semiconductor business, Samsung may have to make a decision whether to separate the Foundry division.

Industry experts believe that Samsung may also incorporate its System LSI division’s mobile application processor (AP) business team into the Mobile eXperience (MX) division. If this pans out, it could increase the chance of Samsung separating its Foundry division. However, the MX division is reportedly against this merger as the System LSI division is not profitable. If the LSI division doesn’t join the MX division, the next possible step is to merge with the Foundry division.

It is worth mentioning that both chip business units were one division until 2017. Some believe combining chip design and manufacturing could help Samsung succeed with its cutting-edge 2nm process. So, if Samsung decides to merge the design and manufacturing units, the plan to separate the Foundry division will be scrapped.

While the poor yield in semiconductor process is a concern, the industry also sees a “conflict of interest” as one of the reasons for not attracting clients. Fabless companies like Apple, Nvidia, and Qualcomm worry that if they order Foundry to produce their chips, Samsung might share their design secrets with the System LSI. This is why separating the Foundry division could be the solution to win more orders.