Samsung Electronics' foundry division is aiming to reach a 100% utilization rate in the second half of this year, according to industry sources. The current utilization rate is estimated at 70% to 80%, and given the order backlog and contract progress, sentiment inside and outside Samsung suggests the target is virtually assured. After falling below 50% since 2024 and suffering a prolonged slump, the foundry lines have come close to full operation in about a year, setting the stage for a turning point in the division's chronic deficit structure.
Industry officials on the 3rd said the rise in utilization is driven by demand for high-bandwidth memory (HBM) base dies and advanced products centered on major U.S. big tech customers. With the 4-nanometer process applied to sixth-generation HBM (HBM4), analysts say the memory supercycle is directly translating into higher foundry utilization. In addition, 2-nanometer process orders are expanding among major cloud service providers (CSPs) and artificial intelligence (AI) and high-performance computing (HPC) customers, and project talks with major clients such as Broadcom are continuing.
Foundry utilization is a key indicator of how much a plant is actually running. In semiconductor contract manufacturing, capital investment is large and fixed costs are heavy, and the more a line sits idle, the more losses snowball. Industry officials say Samsung Electronics' foundry division posted chronic losses last year because utilization at mature process lines such as 4-nanometer and 5-nanometer fell below 50%, making it impossible to absorb fixed costs. Conversely, once utilization returns to a normal trajectory, the increase in revenue flows directly to profit.
Moves to diversify orders are also notable. While Samsung Electronics' foundry has been criticized for high reliance on specific clients, big tech corporations such as Qualcomm, AMD, and Google have recently taken seats at the negotiating table. Tesla is also reportedly set to place next-generation chip volumes on the 2-nanometer process, thickening the mid- to long-term order pipeline. However, the common view is that to translate this into actual large-scale mass-production contracts, the 2-nanometer Production yield must settle in the 70% range; the key watchpoint is how quickly the currently estimated 60% range improves going forward.
Business structure realignment is proceeding in parallel. This year, advanced-process revenue is expected to exceed 50% of the total, and AI and HPC-related revenue is forecast to expand from the high-10% range last year to more than 30% this year. In the second half, mass production of mobile products based on the second-generation 2-nanometer (SF2P) process will begin. Capacity expansion is also accelerating. The first plant in Taylor, Texas, is preparing to start operations this year as planned, and the second Taylor plant will break ground within the year, targeting mass production in 2030. As customer inquiries for the 1.4-nanometer process increase, options to secure additional fabs are under review.
This trend also emerged at the Samsung Electronics second-quarter earnings conference call held on the 30th of last month. Samsung Electronics said, "Utilization across all nodes is improving year over year," and added, "Sub-8-nanometer leading-edge processes have reached peak levels by maximizing sales of products with strong high-growth demand." It projected that 2-nanometer project orders this year will more than double year over year, and on the timing of a return to profit, noted, "It is difficult to specify an exact timing," while adding, "It could be possible in the near future."
Brokerages say the non-memory segment, including foundry and system LSI, could return to profit as early as the third quarter, or by the fourth quarter at the latest. Some also project that if the impact of wafer price hikes is added to normalized utilization, the pace of profit improvement could outstrip market expectations. However, some in the industry caution that more than simply hitting 100% utilization, whether the 2-nanometer Production yield surpasses 70% will be the watershed for full-scale orders from major clients such as Qualcomm and AMD. An industry official said, "Utilization normalization is a leading indicator that the foundry business is crossing the break-even point, but to confirm substantive structural improvement, we need to watch for stabilization of the 2-nanometer Production yield and actual mass-production transitions by major clients."