For Samsung, Its Semiconductor Business Is Vital, but SK Hynix and TSMC Are Gaining Ground

Samsung is navigating a challenging period. The South Korean tech giant is reevaluating its expansion plans and restructuring its workforce to better position itself for the future. Short-term forecasts remain grim: Samsung’s semiconductor revenue is expected to decline by 37.5% in 2023 compared to the previous year, according to Gartner. Adding to the pressure, DIGITIMES Asia predicts a global slowdown in the semiconductor industry by 2025.

To adapt to these challenges, Samsung has decided to delay construction of its second state-of-the-art semiconductor fabrication plants in Taylor, Texas, and Pyeongtaek, South Korea. While the projects haven’t been canceled, the company will postpone construction completion and defer purchases of semiconductor production equipment from suppliers such as ASML and Tokyo Electron.

A Plan to Reclaim Ground

Two key competitors—Taiwan’s TSMC and South Korea’s SK Hynix—are making substantial gains, further pressuring Samsung’s semiconductor business. TSMC holds approximately 60% of the global semiconductor market and is rapidly advancing its technological capabilities. The company is resolving production bottlenecks related to its advanced chip-on-wafer-on-substrate packaging and is ready to deploy ASML’s extreme ultraviolet high-aperture lithography machines.

TSMC also stands to benefit from booming demand for GPUs in AI systems, with senior vice president Hou Yongqing predicting a 250% market growth by 2024. Major players like Nvidia, AMD, and AI-focused startups such as DeepX, FuriosaAI, and Mobilint are choosing TSMC over Samsung for next-generation AI GPU production.

SK Hynix, Samsung’s domestic rival, is also thriving. Its high-bandwidth memory chips—key components for GPUs in AI systems—have achieved 8.8 times greater efficiency than those produced by Samsung and Micron Technology. This competitive edge has bolstered SK Hynix’s stock performance in 2024, outpacing Samsung’s by a wide margin.

To counter these challenges, Samsung is undergoing a major leadership overhaul. The company is placing executives with extensive experience and proven track records at the helm of its semiconductor manufacturing and memory chip development divisions. This restructuring aims to boost Samsung’s competitiveness in the semiconductor and GPU markets. Despite these efforts, questions remain. Can Samsung’s restructuring and strategic shifts bridge the widening gap with TSMC and SK Hynix? For now, the answer remains uncertain. Samsung’s ability to navigate this turbulent period will ultimately determine its future in the fiercely competitive semiconductor industry.

Image | Samsung

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