[Kim Pyeonghwa's Peace and Chips] 'Samsung Foundry Hotel' Aiming to Increase Guests... Will It Become a Bustling Spot?

Samsung Electronics Chasing TSMC, Focuses on Expanding Foundry Capacity
Tripling Capacity Across All Processes by 2027
President Kyung Kyehyun: "To Secure Major Customers, We Must Build a Big Hotel"

Editor's NoteSemiconductors. We hear about them every day, but explaining the concept is quite challenging. They are often called the rice of modern industry, so it's something you must know about, yet articles and books on semiconductors tend to be so difficult that people avoid them. But did you know that semiconductors are actually quite fascinating? Even a single semiconductor component hides the mechanisms of the entire industry and the interests of nations. Peace and Chips will spoon-feed you the hidden contexts and meanings of this somewhat uncomfortable semiconductor field. Just place your spoon.

[Asia Economy Reporter Kim Pyeonghwa] "To secure big customers, you have to build a big hotel." At first glance, this sounds like something a hotel industry businessman would say, but this statement came from Kyung Kye-hyun, President of Samsung Electronics' Device Solutions (DS) Division and head of its semiconductor business. Last month, during a meeting with reporters, President Kyung emphasized that the foundry business is like a hotel. Just as running a hotel requires building it on a large scale, foundry also hinges on production capacity (capacity).

Foundry companies manufacture semiconductors based on design blueprints provided by fabless companies that design semiconductors. These are usually long-term contracts, and the core is to deliver the semiconductors the customer wants on time without any issues. This is why it is often said in the semiconductor industry that if a foundry company fails, the fabless customer company could also go bankrupt.

Since it is a made-to-order business where if you ask for 1, you get 1, and if you ask for 100, you get 100, the number of customers a foundry can attract depends on the capacity it has built. A factory that can produce 100,000 units cannot accept a customer who wants 100,000 units if it lacks capacity. Just as the number of guests a hotel can accommodate depends on its size, the key point in President Kyung’s statement is that a foundry business with larger capacity can serve larger customers.

Samsung Electronics is the world's second-largest foundry player with a 16.5% market share. According to market research firm TrendForce, as of the second quarter of this year, the number one player is Taiwan's TSMC, holding a 53.4% market share. The market evaluates that Samsung Electronics shows differences not only in manpower but also in capacity compared to TSMC. In response, Samsung is working hard to expand capacity to catch up with TSMC in the foundry business. Last week, at a foundry event held in Seoul inviting customers, Samsung announced its focus on increasing capacity. Samsung plans to expand capacity not only in its leading-edge processes but also across mature (legacy) processes.

At the event on the 20th, Choi Si-young, President of Samsung Electronics' Foundry Business Division, delivered the keynote speech, stating, "We will increase investment in production lines by about 10 times by 2024," and "Production capacity will be expanded about threefold by 2027." Securing sites is essential for capacity expansion, and he also mentioned that they have already secured 10 sites domestically and internationally to increase production lines. The goal is to "actively respond to diverse customer demands." We will have to see if Samsung Electronics' foundry hotel will gain popularity among customers.