In the early stages of fierce competition, Samsung grew rapidly with fierce attacks, making TSMC Chairman Morris Chang consider it a formidable competitor. However, history is always full of variables. In recent years, Samsung has encountered setbacks in multiple fields, not only failing to catch up with TSMC in wafer foundry business, losing its dominance in DRAM to South Korean rival SK Hynix, but also facing major setbacks in advanced process yield. The latest news is that the Texas factory has been delayed in opening.
In terms of wafer foundry business, Samsung has repeatedly failed to block TSMC. The yield rate of 3nm is only about 50%, lagging behind TSMC in 2nm yield rate. 4nm orders have been taken away by TSMC, and 5/7nm orders have also been shared by Chinese manufacturers. Samsung has significantly adjusted its strategy by delaying the production time of the 1.4nm process, temporarily withdrawing from the competition for advanced processes, and instead improving the yield of existing processes, providing customized services, and one-stop solutions. However, its wafer foundry business still faces severe challenges, with an operating loss of KRW 4 trillion in 2024 and an expected full year loss of approximately KRW 3 trillion this year. The Texas factory has also decided to postpone its start-up time due to weak market demand and insufficient customers.
In the DRAM field, Samsung once dissolved the HBM team due to misjudging the market, resulting in progress lagging behind SK Hynix. In the first quarter of this year, SK Hynix surpassed Samsung with a market share of 36%, becoming the new dominant player in the global DRAM market. Although Samsung plans to launch an enhanced 12 layer HBM3E and produce HBM4 chips and supply samples in the second half of the year in an attempt to regain its throne, the road ahead is difficult. Samsung is facing a low price impact from the Chinese supply chain in terms of panels, LEDs, and traditional DRAM. Chinese manufacturers not only compete for market share at low prices, but also actively poach Korean semiconductor talents. Samsung was forced to shut down its LCD panel production line and switch to OLED and quantum dot panel technology; Exit the LED business and focus on power semiconductors and Micro LED technology; In the traditional DRAM field, DDR4 modules will be discontinued at the end of the year to focus on higher profit products. In the field of mobile phone brands, although Samsung still maintains its leading position in terms of shipment volume and market share, its global smartphone sales ranking in the first quarter of this year was reversed by Apple, and its flagship phone Pixel 10 series also switched to TSMC chips, causing a significant blow to Samsung. Samsung Electronics' semiconductor business is sluggish, with a provisional operating profit of 4.6 trillion Korean won in the second quarter, a year-on-year decrease of 55.94% and a month on month decrease of 31.24%, far below market expectations, and falling below 5 trillion Korean won for the first time in six quarters, hitting a two-year low; Sales amounted to 74 trillion Korean won, with both year-on-year and month on month declines. Affected by AI chip sanctions, decreased inventory and operating rates, departments such as foundry and NAND are experiencing losses, HBM's contribution is low, and wafer foundries may continue to run deficits. The depreciation of the Korean won also adds to the negative impact. The profits of television and home appliances have slowed down, and it is expected that the operating profit of the DS department will be about 1 trillion Korean won, while other departments have their own predictions. The performance may hit bottom in the second quarter, and there is hope for a recovery in the storage business in the second half of the year. Samsung's transition from growth to crisis confirms the warning of its former chairman, Lee Kun hee, that "within ten years, representative businesses and products may disappear, and top tier companies may also collapse. Industrial competition is not only about speed, but also about stability. If Samsung wants to establish a foothold in the new global semiconductor order, it needs to return to the essence of technology, deepen customer relationships, and properly handle geopolitical risks. The next round of competition has begun, and whether Samsung can regain its dominance remains to be verified by time.
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