Samsung Electronics' pursuit of major foundry customers has encountered obstacles, leading to a strategic readjustment in investment. The construction of the second phase of the Pyeongtaek Campus P4 foundry production line, initially planned to produce cutting-edge semiconductors, has been put on hold. Instead, the company will focus on building memory production lines that yield higher returns.

According to semiconductor industry sources, Samsung Electronics has suspended the construction work for the P4 Phase 2 foundry production line. The P4 Campus is composed of four phases, encompassing both foundry and memory production lines.

Industry analysts suggest that the deterioration of foundry business conditions and design changes have led Samsung Electronics to temporarily halt the construction of Phase 2 of P4 and to start with the memory production line of Phase 3, which reportedly began construction last month.

The decision by Samsung Electronics is primarily attributed to the worsening state of its foundry business. As major customers such as Nvidia, Qualcomm, and AMD opt for TSMC as their foundry partner, profitability in Samsung's foundry business is declining.

In the meantime, the memory business is experiencing a revival due to the expansion of the artificial intelligence (AI) market, driving growth across the semiconductor division. Increased shipments and rising prices of memory chips have helped Samsung Electronics to achieve profitability within five quarters and maintain sound financial health in the second quarter.

Samsung Electronics' foundry business has adopted a "first-mover investment" strategy, constructing manufacturing facilities before securing orders to swiftly respond to customer demands and maintain a technological edge and reliability. Although this strategy carries the risk of production suspensions without orders, it offers advantages in terms of rapid market response.

Despite the "first-mover investment" strategy in its foundry business, the growing importance of the memory business has compelled the company to make adjustments. Industry observers note that, despite the poor state of the foundry market, deferring investment is a difficult decision considering competitive strength, which is why the P4 foundry production line is under industry scrutiny.