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Samsung to Shut Down Around 50% of Wafer Production Lines to Cut Operating Costs

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Update time : 2024-11-02 11:00:57
On November 1st, South Korean media Chosun Daily cited sources familiar with the matter, reporting that in the 4nm, 5nm, and 7nm manufacturing processes at Samsung Electronics' Pyeongtaek Plant 2 (P2) and Plant 3 (P3) production bases, more than 30% of the contract manufacturing production lines have already been shut down, and the company plans to expand the shutdown proportion to approximately 50% by the end of the year. The company stated that it will gradually halt production and make flexible adjustments according to customer order demands.

This move demonstrates Samsung's determination in controlling operating costs. Its contract manufacturing division has been facing challenges in securing large-scale orders from global technology companies such as NVIDIA, AMD, and Qualcomm.

According to internal sources, Samsung believes it is more cost-effective to close low-productivity production lines and reduce electricity costs. "Although Samsung has publicly stated that the facilities will remain operational, just with a reduced utilization rate, in reality, it is gradually shutting down production lines, and the current plan is to reduce operations to around 50% by the end of the year."

Samsung Electronics' semiconductor division has recently been adopting the approach of temporarily shutting down contract manufacturing production lines to cut operating costs. Analysts estimate that the company's contract manufacturing business suffered a loss of approximately 1 trillion won in the third quarter. Therefore, the company has chosen to suspend some production lines to reduce expenses.

Some experts are concerned that Samsung's cost-cutting strategy might affect its competitiveness in the contract manufacturing market. Professor Lee Jong-hwan (transliterated name) of the Department of System Semiconductor Engineering at Sangmyung University said: "Since Samsung Electronics is more focused on its core semiconductor business - memory chips, the contract manufacturing business has been relegated to a secondary position. With the shutdown of factories, the gap with TSMC is widening day by day, and it may become more difficult for Samsung to catch up."
 

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