Samsung Electronics to establish semiconductor foundry business unit

Samsung Electronics is establishing a "foundry business unit" in the Device Solutions Division, which is in charge of semiconductor business. The measure is being taken to empower a business operation that has strong growth potential for the future.

Samsung Electronics announced on Friday a plan to reshuffle its organization to split the system LSI business unit into the fabless unit and the foundry unit as well as personnel reshuffle of its executives in the DS division. The company will keep the memory business unit intact. “The measure is aimed at strengthening expertise and responsible management of respective business units,” a Samsung source said.

Fabless companies are only engaged in design of semiconductors without having any production lines. Apple is a good example. A foundry company receives design drawings from fabless companies and produces chips on the latter’s behalf.

The foundry business unit will be headed by Vice President Jeong Eun-seong, who has been leading Samsung Electronics’ semiconductor research center since 2012, while the System LSI business unit will be led by Vice President Kang In-yeop, head of the SOC development office. As a result, Samsung’s semiconductor operation will be composed of three units namely memory chips, system LSI, and foundry businesses.

The global foundry market has been steadily growing at an annual average of 9 percent over the past five years. Samsung’s foundry business has seen robust expansion in sales as well. The electronics giant raked in 4.518 billion U.S. dollars in sales in the foundry business alone last year. The figure represents a 79 percent increase from 2.529 billion dollars Samsung posted in 2015.

However, Samsung Electronics is ranked fourth in market share by controlling 6.9 percent of the global foundry market. TSMC, which ranks atop, accounts for more than half of the global market by taking up a 54.5 percent share as of the end of last year. Global Foundry (8.6 percent) of the U.S. is ranked second and UMC (8.5 percent) of Taiwan is ranked third.

Samsung Electronics and Samsung Display also announced promotion of 42 executives and 11 executives, respectively on the day. The reshuffles are small in scale just like those in the IT Mobile Division and the Consumer Electronics Division. This year, Samsung Electronics has only conducted personnel reshuffles that are deemed essential primarily in the operational area, such as product development and manufacturing and marketing, and done little reshuffles in the back office field.

Dong-Il Seo dong@donga.com · Dong-Jin Shin shine@donga.com