Samsung’s foundry partners see halved profits in 2022

Samsung’s design partners for its chip foundry business saw their operating profits halved in 2022.

Samsung Foundry’s Design Solution Partners ADTechnology, Gaonchips, and Coasia saw their revenue and operating margin rate impacted heavily by the global economic downturn.

ADTechnology, Samsung’s largest design house partner, recorded 164.2 billion won in revenue and 4.4 billion won in operating profit.

Operating profit dipped by 61% from the previous year while revenue was halved over the same time period.

On the other hand, Gaonchips saw revenue increase but its profitability was lowered.

In 2022, the company recorded 43.3 billion won in revenue, an increase of 34.3% year-on-year.

But operating profit dropped 37.1 billion won over the same time period to 3.9 billion won.

Gaonschip said it saw rising costs and spent more on hiring engineers which caused the drop in profit.

Coasia performed the worst among its colleagues. While its revenue increased 21.8% year-on-year to 463.6 billion won in 2022.

But it recorded 22.4 billion won in operating loss, around 9 billion won steeper than the year prior.

However, this loss wasn’t solely caused by its chip business but also its lens module and LED businesses.

Coasia however is yet to have recorded a profit from its chip business.

The poor earnings of Samsung’s foundry partners contrast with that of its rival TSMC.

TSMC’s largest design house partners, GUC and Alchips, recorded 926 billion won and 581 billion won in revenue, respectively, last year.

Both companies are also maintaining an operating margin rate of 10%.

A source familiar with the matter said TSMC’s revenue in the foundry sector was bigger than Samsung’s, while at the same time, the Taiwanese chipmaker also uses six key design house partners.

Samsung Foundry on the other hand uses more design house partners relative to its revenue and number of customers, they added.