▲ Han Jin-man, president and head of Samsung Electronics' Device Solutions (DS) Division Foundry Business
Han Jin-man, president and head of the Foundry Business at Samsung Electronics' Device Solutions (DS) division, said on June 12 that "a turnaround to profitability for the foundry (semiconductor contract manufacturing) business does not look easy even next year," adding, "there is a high possibility of achieving a surplus in 2028."
President Han made the remarks during a business briefing for the foundry division held this afternoon, where he shared the current business status and future strategies with employees.
Securities analysts estimate that the non-memory business division, including foundry and System LSI, will narrow its losses compared to last year, recording an operating loss of 2 trillion to 3 trillion won this year.
Some in the industry have raised the possibility of a turnaround to profitability as early as next year.
However, President Han's remarks are interpreted as a conservative view within the company regarding the timing of the turnaround, as rising costs from the recent introduction of a special management performance bonus system have emerged as a variable.
Samsung Electronics recently established a special management performance bonus system, funded by 10.5% of the semiconductor division's business performance, through a recent labor-management agreement.
Under the system, the special performance bonus will be paid entirely in treasury stock after taxes, according to conditions set by the company.
Han cited several reasons for predicting continued losses this year and next year, including the cost burden of the special performance bonus, delays in shifting away from a mobile-centric business structure, insufficient technological maturity, a low-profitability contract structure, and an inadequate strategy for operating mature (legacy) processes.
Han reportedly said, "Ultimately, the management is responsible for the losses," and expressed his intention to improve the business structure to enhance profitability.
Regarding compensation, he emphasized that recovering business competitiveness must come first, while expressing his commitment to raising compensation levels so that employees can feel the benefits through performance generation.
Samsung Electronics plans to simultaneously pursue strengthening its competitiveness in advanced processes and securing a business foundation for mainstream processes.
Regarding the currently profitable 8-inch (legacy) foundry business, Han reportedly explained that the company plans to phase it out, saying, "The market is becoming a red ocean."
He also mentioned that while some clients secured during the COVID-19 pandemic involved low-priced contracts, the company is securing high profitability with newly acquired clients.
There was also some explanation regarding organizational operations and human resources policies, which have recently drawn attention.
Han stated that the company currently does not plan to promote personnel transfers between divisions through job postings (internal recruitment announcements).
Meanwhile, Samsung's foundry business is accelerating its performance improvement by securing large clients.
Samsung Electronics is building a production facility applying a 2-nanometer (nm, where 1 nm is one-billionth of a meter) advanced process in Taylor, Texas.
The Taylor plant is expected to start initial operations at the end of this year and begin mass production for major clients, including Tesla, starting next year.
Indeed, Samsung Electronics signed a contract with Tesla last year worth $16.5 billion (approximately 25 trillion won) to produce next-generation AI6 chips, and is also in charge of producing the Language Processing Unit (LPU) for Groq, which is mounted on Nvidia's platform.
Recently, possibilities have also been raised that Samsung may win an order to produce core components for Google's next-generation Tensor Processing Unit (TPU).
Han urged, "As the head of the business division, I feel a heavy responsibility," adding, "Since we have sufficient technological prowess and capabilities, we can surely recover our competitiveness. Please trust each other and join forces."
The briefing was held simultaneously online and offline, with employees from domestic and overseas workplaces participating in real-time.
(Photo: Provided by Samsung Electronics, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.