Report: Samsung Could Separate Chipset Foundry Division

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Samsung Electronics consists of a number of different divisions with responsibilities for various products, including the System LSI division, which designs display driver electronics and camera sensors. The Systems LSI division is joined by the System-on-Chip unit, responsible for the Exynos-branded chipsets as found in a number of Samsung and third-party devices, the foundry business team and the support team. As such, Samsung both designs and builds its own chipsets as well as builds chipsets for other chip designers, most notably North American company, Qualcomm. A report seen in South Korean newspaper, Business Korea, is suggesting that the conglomerate is mulling plans to reorganize this division and either separate the design and manufacturing unit, or essentially divide the company to spin off the fabless and foundry businesses.

This report follows the announcement that Samsung lost their valuable Apple chipset contract; that is, building Apple's mobile chipsets for the next generation of iPhone and iPad, with the TSMC (Taiwan Semiconductor Manufacturing Company) benefiting from Samsung's loss. Apple are one of the largest customers in the mobile chipset markets using their own custom-designed units for the iPhone smartphone and iPad tablet lines. By losing this contract, it has raised awareness within the company of the potential need to separate the foundry business from the rest of the unit. One plan sees the System-on-Chip and System LSI divisions combined and the foundry business separated out to form a new, standalone business. If the division were to happen, Samsung's plan is that this change would allow the foundry business to be better managed and grown, although it does not go into details as to how this might be accomplished.

This would be an interesting move from Samsung based on the loss of a major contract, but the company operates in an industry where foundry customers are notoriously fickle and regularly change suppliers. Apple has used Samsung and TSMC chipsets for a number of years and often combines supplier for a given product, meaning that a given iPhone model may contain an Apple-designed chipset built by either Samsung or the TSMC. Samsung's foundry has relatively recently gained the ability to mass produce chipsets constructed at the 10nm process size and on the back of this, has signed a business deal with Qualcomm to mass produce the designer's new generation, smaller, 10nm chipset. The smaller the process size for a given chipset, the lower the voltage needed to drive it and the correspondingly smaller the power consumption and heat output, which are very important considerations for the mobile industry.

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