Taiwan’s TSMC, the leading global foundry in semiconductor consignment production, continues to assert its dominance amidst the prevailing semiconductor recession. While TSMC experienced sales growth in May, rival Samsung Electronics is poised to hit a low point in the second quarter of this year. Undeterred, Samsung Electronics has formulated a plan to narrow the gap with TSMC by 2025, primarily through the construction of an additional foundry in the United States.
TSMC recorded sales of NTD 176.537 billion (approximately $5.7 billion) in May. Although this represents a 4.9% decrease compared to the same period last year, the figure demonstrates a notable 21.4% growth from March, a month in which TSMC experienced its lowest sales of the year (NT$ 145.48 billion). Notably, TSMC’s May sales also outperformed April’s figures by 19.4%.
Initially, TSMC had predicted a 10% decline in sales for the first half of this year compared to the same period last year. However, the introduction of new products by customers, coupled with a surge in demand for artificial intelligence (AI) semiconductors driven by ChatGPT, is expected to bolster earnings in the second quarter.
Taiwan’s DigiTimes forecasted, “With cumulative sales of NTD 324.4 billion in April and May, TSMC’s sales outlook for June appears promising, suggesting that it will likely surpass its original target for the second quarter.”
In contrast, Samsung Electronics’ second quarter prospects remain bleak. According to FnGuide, the consensus among securities firms places Samsung Electronics’ operating profit for the second quarter of this year at 212.8 billion won (approximately $167.6 million), reflecting a staggering 98.49% decline from the same period last year. This performance marks the lowest point since the fourth quarter of 2008, when the global financial crisis wreaked havoc.
Experts perceive the divergent performance of these two companies as emblematic of the foundry business. While Samsung Electronics operates as a comprehensive semiconductor company with a primary focus on memory, such as DRAM, TSMC follows a “pre-order and production” model that shields it from concerns about semiconductor inventory surges and price fluctuations.
Nonetheless, Samsung Electronics has adopted a strategy of expanding its production capacity, known as Kepa, to bridge the foundry gap with TSMC. This approach prioritizes long-term gains over short-term performance.
In fact, John Taylor, Vice President of Manufacturing Engineering at Samsung Electronics, recently disclosed to CNBC, “While we have announced the construction of one factory thus far, we have ample space for many additional factories in close proximity.” This statement aligns with Samsung’s plans to construct more facilities.
Samsung Electronics has already commenced the construction of the new plant, a $17 billion endeavor, and has outlined its intentions to more than triple foundry production capacity by 2027.
Of notable interest is Samsung Electronics’ application for the “Chapter 313” property tax reduction policy in Texas, accompanied by a proposal to build 11 new factories over the next 20 years. Vice President John Taylor’s statements coincide with this vision.