Inside Samsung Electronics, some say the foundry division could return to profit as early as the third quarter of this year. Analysts say profitability has gained momentum as production of base dies used in the 2-nanometer advanced process and high-bandwidth memory (HBM) increases.
According to the industry on the 8th, thanks to Production yield improvements and the effect of large orders, the timeline for the Samsung Electronics foundry division's return to profit, initially set for late this year to next year, is expected to be moved up to the third quarter of this year. It would be a recovery in results for the first time in about four years since trillion-won operating losses began in 2022. Observers say the foundry division, long seen as the Achilles' heel of Samsung's semiconductor business, has entered a faster-than-expected track of structural improvement.
First, Samsung Electronics' advanced nodes are performing better than expected. Samsung Electronics is said to have raised Production yield for its 2-nanometer Gate-All-Around (GAA) process to above 60% as of the first quarter. While it still falls short of the 70% level widely seen as the threshold for mass-production economics, the industry says it is sufficient to proceed with initial volume production while courting new customers. In its first-quarter 2026 earnings announcement in April, Samsung Electronics said "utilization at advanced process lines has reached a peak level." Despite seasonally weak demand, revenue is understood to have grown by double digits from a year earlier.
Customer wins that have continued since last year are set to convert into substantive sales in the second half. In July last year, Samsung Electronics signed a long-term Autonomous Driving chip supply contract worth 2.28 trillion won with Tesla, and it plans to begin 2-nanometer mass production of AI5 and AI6 chips at its Taylor plant in Texas in the second half of this year. Nvidia CEO Jensen Huang unveiled the AI inference-only chip "Grok 3" in his "GTC 2026" keynote in March, also openly acknowledging Samsung Electronics as the foundry.
The order book is also swelling quickly. Samsung Electronics projects that the number of 2-nanometer-related orders this year will rise more than 130% from a year earlier, and beyond Tesla and Nvidia, it is expanding cooperation with multiple big tech companies including Apple and Nintendo. There are also accounts that volumes for 6th-generation HBM (HBM4) base dies are already effectively sold out.
As mass production ramps at the Taylor fab, the fixed-cost structure is expected to flip soon, strengthening expense health. The Taylor fab, which drew an investment of $37 billion (about 54 trillion won), had been generating hefty build-out expenses, deepening the foundry division's losses. A source familiar with Samsung Electronics said, "As mass production gets into full swing in the second half, depreciation could instead turn into a fixed-cost dilution effect, sharply improving the profit-and-loss structure."
It also helps Samsung Electronics that rival Taiwan's TSMC has seen its advanced process lines effectively reach saturation due to surging demand for AI accelerators. Some fabless (chip design) firms are actively weighing Samsung Electronics as an alternative, and there is also talk that AMD is considering a dual-foundry strategy for part of its next-generation graphics processing unit (GPU) volumes.