Samsung Electronics has announced a significant reduction in its foundry division's facility investment for this year, cutting the budget by more than half compared to the previous year. Samsung Foundry has set its facility investment budget at around 5 trillion won for 2025, a sharp decrease from the 10 trillion won range invested in 2024.

This decision comes after a period of aggressive investments from 2021 to 2023, during which Samsung Foundry spent about 20 trillion won to expand its production capacity and advance its technology. However, during the Q3 2024 earnings announcement in October last year, Samsung Electronics had already predicted a conservative approach to facility investments, stating, "The scale of facility investment execution in 2024 is expected to decrease," and "In 2025, we will maximize the operation of the existing production infrastructure."

This year's foundry investment will focus on the S3 plant in Hwaseong and the Pyeongtaek 2 plant (P2). At the S3 plant, part of the 3nm (nanometer, one-billionth of a meter) line will be converted to 2nm. This conversion involves adding some equipment to the existing line, which is not considered a large-scale new investment. Meanwhile, at the P2 plant, a 1.4nm test line with a capacity of 2,000 to 3,000 wafers per month is planned to be installed within this year. Additionally, there will be small-scale investments to supplement various equipment and infrastructure at the Taylor plant in the U.S.

The primary reason for the reduced facility investment is sluggish customer orders. Samsung Foundry has recently faced issues with low yield rates and delays in advanced processes, which have hindered its ability to attract 'big tech' customers. The operation rate of the 4-7nm foundry facilities in Pyeongtaek has been reduced by more than 30%, further exacerbating the situation.

A more pressing concern for Samsung Foundry is the widening gap with TSMC, the leading foundry company. TSMC invested 956 billion Taiwan dollars (about 42 trillion won) in foundry facilities last year alone, which is four times the amount Samsung Foundry invested during the same period. This significant investment by TSMC highlights the competitive pressure Samsung faces in the global semiconductor market.

An industry official explained, "It seems that Samsung Foundry is prioritizing enhancing its 2nm technology competitiveness instead of sharply reducing investments." This strategic focus on advancing 2nm technology is seen as a critical move to improve Samsung's position in the market and address the technological challenges it currently faces.