Korean technology giant Samsung Electronics' chip manufacturing division is likely to lose out to TSMC in terms of revenue after it releases its third quarter earnings, according to reports in the Korean press. This will mark a sharp contrast over the second quarter results, which saw a recovery in the global memory market and propelled Samsung's chip making division, called the Device Solutions division, to the top of the global foundry pyramid.
Korean analysts believe that Samsung DS' third quarter revenue will fail to grow sequentially, and since TSMC's Q3 revenue jumped by 12.9% over the previous quarter, the firm will beat Samsung when it comes to net sales.
Samsung's Chip Manufacturing Revenue Expected To Stay Flat Sequentially In Q3 Believe Market Watchers
Samsung released its preliminary earnings results for the third quarter earlier this month and announced that it expects to earn a midpoint of KRW79 trillion in sales or $57.7 billion. If achieved, these results will mark a strong 17.2% annual growth for the firm, whose second quarter results were a breath of fresh air. During Q2, Samsung earned KRW74 trillion in revenue, with its DS business bringing in KRW28.56 trillion.
This translates into roughly $21 billion, allowing Samsung DS to surpass TSMC's revenue for the same period. During Q2, TSMC raked in $20.82 billion in sales for a strong 30.8% annual growth that marked a recovery for the company that had struggled in the aftermath of the chip industry's struggles during the immediate post pandemic era.
Samsung attributed its revenue growth to strong demand for memory products, which had struggled throughout 2023. This led to Samsung's revenue dropping by 37.5% annually, according to Gartner. It also led beleaguered chip giant Intel to become the world's biggest chip manufacturer in revenue.
However, Samsung's lead will be short lived if estimates reported by The Korea Herald bear fruit. According to the publication, Korean industry watchers expect Samsung's DS revenue to remain flat sequentially in Q2. Consequently, with TSMC's Q3 revenue sitting at $23.5 billion, should Samsung DS fail to grow revenue in Q3 over Q2, then its $21 billion in sales will be beaten by a hefty margin of $2.5 billion by TSMC.
While both firms manufacture semiconductors, TSMC makes CPUs and GPUs, or logic chips, while Samsung's business is diversified and also includes memory products. Samsung DS is divided into three subdivisions: Memory, Samsung LSI and Samsung Foundry. Samsung LSI is responsible for manufacturing Samsung's Exynos processors and ISOCELL image sensors, while Samsung Foundry is the contract chip manufacturing division.
However, both have struggled as NVIDIA relies primarily on TSMC for its AI GPUs and a slump in global smartphone demand reduces volumes shipped by Samsung LSI. Consequently, the Herald's sources also believe that the two business divisions ran a deficit of KRW1 trillion during Q3. Samsung has also struggled to pitch its advanced memory products to NVIDIA, which has continued to rely on advanced HBM3 and HBM3e memory products from US memory giant Micron.
While TSMC's advanced manufacturing process (those utilizing 7 nanometer and lower technologies) grew by eight percentage points to account for 67% of its revenue in Q4 2023, Samsung Foundry experienced a 1.9% sequential drop to $3.62 billion.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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