A decline in the global memory chip market is hitting Samsung hard
Samsung is one of the very few companies designing and manufacturing application processors on its own. However, the Korean firm’s chip fabrication tech has had some problems for years. Chips made by the company have always underperformed compared to competing solutions manufactured by arch-rival TSMC. And the problem isn’t limited to its in-house Exynos processors. Samsung-made Snapdragon processors (the Snapdragon 8 Gen 1) have also been having various sorts of issues. The situation has gotten to a point where Samsung’s smartphone division is no longer using Exynos processors in its flagship models. The Galaxy S23 series will ship with Qualcomm’s Snapdragon 8 Gen 2 globally (an overclocked version of it). Unsurprisingly, Qualcomm had TSMC manufacture this processor. Even Tesla, which has been sourcing its semiconductor needs from Samsung, is switching to the Taiwanese firm for next-gen chips. Nvidia is another Samsung customer that recently switch to TSMC. However, this doesn’t affect Samsung much. It has never had a stronghold in the foundry market. TSMC dominates that market by a huge margin. The majority of Samsung’s semiconductor profits come from memory chips. The company is the world’s largest memory chip vendor. Unfortunately, the memory market is seeing a global decline in demand and prices, so much so that the biggest player is now seeing its profits getting halved from the whole semiconductor unit. Samsung not using Exynos processors in the Galaxy S23 series may also be partly to blame for this profit decline. The smartphone division can’t risk losing customers, however, so it’s understandable. The company needs to fix its foundry woes. Samsung has partnered up with San Jose, California-based software company Silicon Frontline Technology to improve its semiconductor yield rates as investors raise concerns that it is losing grip on the market.
Lower profits mean lower bonuses for Samsung semiconductor employees
A profit decline means Samsung’s employees will get lower bonuses next year. The company’s Device Solutions division, which encompasses foundry, memory chips, and logic chips businesses, offers its employees bonuses of up to 50 percent of their annual salary. But, that depends on how much profit it made in the previous year. For employees to get the full 50 percent bonus in 2024, operating profit from semiconductor sales this year reportedly should be more than KRW 28 trillion; that’s not happening. As per the current estimate, the bonuses could be between 5 to 11 percent, The Elec reports.
