Intel’s potential foundry restructuring may raise Samsung’s market share

[Courtesy of Samsung Electronics Co.]

South Korean semiconductor companies, including Samsung Electronics Co., are expected to be affected by Intel Corp.’s possible restructuring of its foundry business.

In 2021, Intel re-entered the semiconductor foundry market with an aim to achieve the No.2 position globally. However, it is now reportedly considering suspending or withdrawing some related investment projects, potentially separating or selling its foundry unit.

Intel‘s move is expected to further accelerate the reshuffling of the global semiconductor industry as the artificial intelligence (AI) memory semiconductor market is improving. This could potentially benefit Korea’s semiconductor sector.

Samsung Electronics, in particular, could strengthen its position as an alternative company amid the dominance of Taiwan Semiconductor Manufacturing Co. (TSMC) in the foundry market.

According to market research firm TrendForce, TSMC maintained its leading position in the global foundry sector in the first quarter of 2024, with $18.85 billion in revenue and a 61.7 percent market share.

Samsung Electronics came in second, with $3.36 billion in revenue and an 11 percent market share.

Intel did not even make the top 10 in terms of global foundry market share, although it announced plans to introduce cutting-edge foundry process technology around 1.5 nanometers during the year.

Intel reportedly manufactures most of its own central processing units (CPUs) in its foundry process because it failed to gain enough credibility in semiconductor contract manufacturing and thus has a thin external customer base. This means that Intel itself is the primary customer of its foundry division.

If Intel reduces the size of its factories or scales back investments, which are supported by the U.S. CHIPS Act, the related subsidies could be redirected to other companies that are building large semiconductor plants in the United States, such as TSMC or Samsung Electronics, according to industry insiders.

Furthermore, Intel’s potential sale of its foundry business would likely require U.S. government approval as it is directly related to U.S. economic security.

In this regard, it could be inevitable for Intel to engage in talks about mergers and acquisitions (M&A) with companies from allied nations, and Samsung Electronics could be considered a potential candidate, sources said.