Will Intel's restructuring affect Samsung's foundry business?

Find the Latest SoC Solutions
for... Automotive... IoT... Security... Audio... Video

Speculation intensifies about acquiring Intel's business

www.koreatimes.co.kr/www2/index.asp, Oct. 01, 2024 – 

By Nam Hyun-woo

Intel is expected to announce a restructuring plan that includes sales of its foundry and several other semiconductor businesses as part of the chip giant's efforts to streamline its operations.

The restructuring, if it takes place, is anticipated to create a ripple in the global semiconductor industry, with Samsung Electronics and other semiconductor titans being mentioned as potential buyers of those businesses.

Reuters reported Monday that Intel's CEO Pat Gelsinger and key executives are expected to present a restructuring plan during a mid-September board meeting. The plan will likely contain proposals to sell.

Bloomberg also reported that Intel is considering various measures to improve its profitability, including a potential divestiture of its foundry operations.

Market observers anticipate that Intel's potential exit from contract manufacturing could benefit Samsung, as it would reduce competition. However, they expect the overall impact on Samsung to be limited.

According to market tracker Counterpoint Research, Taiwan's TSMC stands as the world's biggest chip foundry with a 62 percent market share in the second quarter of this year. Samsung was the second largest with 13 percent, while UMC, SMIC and GlobalFoundries rounded out the top five with 6 percent, 6 percent and 5 percent, respectively.

Despite Intel's name value, the company's foundry was not counted separately due to its small market share. Intel's foundry posted $4.3 billion won in revenue in the second quarter of this year but suffered a $2.8 billion operating loss during the same period.

In 2021, Intel announced its re-entry into the foundry market, pledging aggressive investments to challenge Samsung's world's No. 2 position. However, the bid has not been successful, with semiconductor industry officials assuming that Intel foundry is contract manufacturing the company's own CPUs.

"If Intel sells off its foundry business, Samsung will likely see one of its competitors dropping out of the competition," an industry official said. "However, the market share of Intel's foundry remains at a mere level, and it is hard to say that the sale may bring an immediate boost to Samsung's chip market share."

Gaining attention is who will acquire Intel's foundry business.

TSMC and Samsung are mentioned as potential buyers because the two companies have the experience and financial capabilities to run Intel's microfabrication foundry.

However, industry officials said it could be a risky bet for Samsung to make another sizeable investment in Intel's foundry while it is still struggling to close the gap with TSMC.

Samsung's non-memory chip business, which includes foundry and system large-scale integration devices, reportedly posted an operating loss of 300 billion won ($2.24 million) in the second quarter of this year.

Washington's approval could also be an obstacle. Since the United States considers matters related to manufacturing semiconductors an issue of national security, policymakers in the U.S. may oppose Samsung or TSMC acquiring Intel foundry citing the necessity to contain their presence.

"Judging by the market situation only, GlobalFoundries could be the buyer, because it is a U.S. company (in line with the policy of) safeguarding the U.S. national security," another semiconductor industry official said.

click here to read more...

 Back