November 4, 2024 /SemiMedia/ — Samsung Electronics' semiconductor division is reportedly taking steps to temporarily halt parts of its contract chip manufacturing lines to cut costs. Analysts estimate that Samsung's foundry business faced a loss of up to 1 trillion won in the third quarter of 2024, prompting the company to reduce production on certain lines.

Sources indicate that Samsung has already shut down over 30% of its 4nm, 5nm, and 7nm wafer foundry lines at its Pyeongtaek 2 (P2) and Pyeongtaek 3 (P3) facilities, with plans to extend the suspension to around 50% by the end of the year. The move seeks to balance cost savings with order demand, as the company monitors customer orders and adjusts production accordingly.

The decision to halt operations, sources say, aims to lower power expenses rather than running lines at low utilization, which would be less efficient. “Samsung has stated that it would maintain operations at lower utilization, but in reality, the company is gradually reducing production. The plan is to bring the utilization rate down to about 50% by the end of the year,” an industry official said.

Some experts worry that Samsung’s cost-cutting measures could weaken its competitiveness in the foundry sector. Lee Jong-hwan, a professor of systems semiconductor engineering at Sangmyung University, noted, “Samsung Electronics has prioritized its core semiconductor business—memory chips—while the foundry business has taken a back seat. With facilities pausing operations, the gap with TSMC could widen further, making it harder for Samsung to catch up.”