The cold semiconductor winter has hit South Korea's Samsung's memory chip and foundry business. In the third quarter of this year, Samsung may cede the position of the world's largest semiconductor sales company to TSMC.

According to Korean media nocut news, in the third quarter of this year, TSMC replaced Samsung for the first time in global semiconductor sales. Among them, TSMC, which ranks first in foundry, has sales of 27 trillion won, while Samsung estimates it at 24-25 trillion won.

Samsung Electronics, which focuses on storage semiconductors, experienced a "profit shock" in the third quarter of this year due to the downturn in the storage industry. On October 7, Samsung Electronics released its third-quarter performance forecast. Operating profit was 10.8 trillion won, down 31.73% from the same period last year and 23.4% from the previous quarter.

Although Samsung does not disclose the performance of each business unit, semiconductors, which are the backbone of performance, have lost momentum due to shrinking demand.

Korean media nocut news reported that according to the semiconductor industry and the securities industry on the 9th, Samsung Electronics ceded the world's largest semiconductor sales to TSMC, the leader in the semiconductor foundry field. The securities industry predicts that the operating profit of Samsung Electronics Semiconductor (DS) division will be around 6 trillion won in the third quarter. Compared with the DS division’s second-quarter operating profit of KRW 9.98 trillion, it plummeted by more than 30%. In particular, the securities industry held the operating profit of the storage business unit at around 5.5 trillion won in the third quarter. That said, more than 90% of the semiconductor division's operating profit is memory dependent.

Since Samsung's performance is highly dependent on storage semiconductors, if storage performance deteriorates, performance will also be sluggish.

According to nocut news, in fact, Samsung Electronics achieved a "triple crown" with the highest value in the three indicators of annual sales, operating profit and current net profit for two consecutive years in the memory boom period of 2017-2018. But in 2019, when the memory was declining, the annual operating profit was halved year-on-year. Last year, Samsung Electronics benefited from the prosperity of storage semiconductors, surpassing Intel in semiconductor sales and ranking first in the world, but due to the sharp deterioration of the business conditions, it is facing the crisis of being reversed by TSMC.

It is worth mentioning that TSMC’s third-quarter performance report released on October 7 was basically in line with expectations. Data released by TSMC shows that consolidated revenue in September was NT$208.248 billion, a decrease of 4.5% from the previous month and a year-on-year increase of 36.4%, the second highest in a single month. Revenue in the third quarter was NT$613.143 billion (approximately KRW 27.5 trillion), the ninth consecutive quarterly record high.

If the outside world's estimates of Samsung's third-quarter semiconductor performance are realistic, then TSMC surpassed Samsung and took the world's first position in the third quarter.

Samsung and TSMC have been in fierce competition in the field of semiconductor foundry, but in recent years, TSMC has steadily won, and Samsung is relatively passive.

In order to catch up with TSMC, Samsung has also taken a radical route in foundry technology. On June 30th this year, Samsung Electronics announced that its Huacheng factory had started mass production of the first batch of chips by using the 3 nm GAA process node, becoming the first semiconductor wafer foundry in the world to mass produce 3 nm chips.

TSMC officially stated that the company's 3nm will be mass-produced in the second half of this year and will continue to use FinFET technology. Compared to TSMC, while Samsung is more adventurous on 3nm, opting for the GAA process. The GAA process is considered to improve some deficiencies of the FinFET architecture, which can improve the power and efficiency of the chip, and also reflects Samsung's ambitions in the foundry field.

According to the plan, Samsung will announce its detailed quarterly financial report later this month. However, considering that the price decline of dynamic semiconductor memory (DRAM), the main product of Samsung Electronics, is likely to intensify. The outlook for the fourth quarter is not optimistic either. Samsung Electronics executives said in a discussion with employees last month that the semiconductor sales target in the second half of this year was lowered by about 30% compared with the April expectation.

Source:The Paper