Samsung Electronics is aiming to overcome its current downturn with a new strategy for its memory chip business, which may be accompanied by an upcoming shakeup of the president-level executives in its semiconductor division.

According to industry sources, Sunday, Samsung Electronics’ Device Solutions division, which is in charge of the company’s semiconductor business, has been holding meetings on mid to long-term strategy planning since late last week.

These meetings are seen as a precursor to a potential rebalancing of the division’s workforce. Sources indicate that the company may announce a reshuffle as soon as this week, focusing personnel on the memory business rather than on the unprofitable chip design and foundry businesses.

In doing so, it was reported that the company may opt to replace a number of president-level leaders, including memory business head Lee Jung-bae, foundry business head Choi Si-young and chip designing business head Park Yong-in.

The move comes as a consequence of the company’s disappointing earnings in the third quarter of this year, when the semiconductor division reported 3.86 trillion won ($2.8 billion) in operating profit, falling far short of market expectations. The underwhelming earnings fueled concerns that Samsung has lost its competitiveness in supplying high-bandwidth memory (HBM) chips to makers of artificial intelligence processors.

Against this backdrop, Samsung Electronics Vice Chairman and CEO Han Jong-hee said during the company’s 55th founding anniversary ceremony on Saturday, “there can be no innovation or growth without change,” and “securing technology and quality for customers is the fundamental competitiveness which is the only way to lead a paradigm shift.”

The change Han referred to is expected to be the company’s strategic shift toward greater flexibility in its principle of becoming an integrated device manufacturer (IDM) — a company that takes charge of all processes in semiconductor production, from planning to the final product.

During its earnings call on Thursday, chip division executive vice president Kim Jae-joon said “meeting customer requirements is crucial in custom HBMs, so we plan to be more flexible in selecting foundry partners in and outside the company for manufacturing the base die.”

A base die is a thin piece of silicon that serves as the foundation upon which the chip's components are stacked.

This means that Samsung has taken a step back from its previous IDM strategy, seeking to attract customers to its HBM offerings even at the cost of receiving fewer orders for its foundry business. In contrast, Samsung's chipmaking rival, SK hynix, has been collaborating with the world-leading foundry, TSMC, in packaging HBMs and plans to expand partnerships in producing base dies for next-generation HBM4 chips.

The company also hinted at reducing investments in its struggling foundry business, which has been accumulating losses, to concentrate on its more promising memory business.

During the earnings call, the company said it will maintain this year’s investments into its memory business at a level similar to that of last year, but noted that capital expenditures for its foundry business will decline by the end of this year “considering market conditions and investment efficiency.”

“Still, there seems to be a clear gap between Samsung's language and the market's language,” Eugene Investment analyst Lee Seung-woo said. “If Samsung can indeed make dramatic changes as outlined, it could gradually restore its former glory. Next time, it should be a result, rather than just a plan.”

By: DocMemory
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