Samsung’s Semiconductor Shutdown: What’s Driving the Decision?
Samsung plans to temporarily shut down 30% of its trailing-edge semiconductor manufacturing facilities in South Korea due to low demand, with closures expected to rise to 50% by year-end. These shutdowns affect Samsung’s older 4 nm, 5 nm, and 7 nm nodes, which have seen a drop in demand following Qualcomm and Nvidia’s shift to rival TSMC for more competitive chip manufacturing. However, Samsung’s cutting-edge 3 nm and upcoming 2 nm nodes remain unaffected; Samsung has secured contracts with companies like Preferred Networks and may produce Qualcomm’s Snapdragon 8 Gen 5 for Galaxy. This strategic choice enables Samsung to manage energy costs without fully mothballing its assets, positioning the company to focus on its higher-yielding, next-gen nodes for future growth.
My Take
Samsung’s partial shutdown is a prudent response to current demand while conserving resources for future node development. The focus on advanced nodes reflects Samsung’s commitment to competing with TSMC at the cutting edge, which may define its position in the industry’s future landscape. The shutdown highlights the challenge of balancing legacy node demand with emerging technologies, which is affecting the semiconductor industry. As Samsung continues its 2 nm developments, any breakthroughs could offer it an edge, especially in the AI and mobile markets.
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Credit: Notebookcheck, Chosung