Samsung foundry must spin off to succeed, former TSMC executive says

"Foundry is a service business, not a technology-intensive industry. Whether Samsung has good technology and whether Samsung can run a good foundry are two completely separate questions. Technology is a necessary condition for doing foundry — not a sufficient one. For Samsung Electronics to succeed in the foundry business, it must spin off as an independent legal entity and run a genuine foundry operation."

Yang Guang-lei, director of industry-academia innovation at National Taiwan University of Science and Technology and adjunct professor at National Taiwan University, made the remarks June 3 at the Haoyang Laboratory building on the NTUST campus in Taipei. He argued that memory chips and foundry are fundamentally different businesses, and that Samsung Electronics cannot succeed in foundry while operating in the shadow of its memory division.

Yang studied electrical engineering at National Taiwan University before earning a doctorate in computer science from UC Berkeley. He then joined TSMC, where he served as director of R&D infrastructure engineering and was one of the so-called "Six Knights" credited with laying the foundation for the company's growth. He later served as an outside director at SMIC and as a technology adviser to Intel Foundry before joining National Taiwan University as an adjunct professor in 2023.

With more than 30 years in the semiconductor industry, Yang described the current chip supercycle as an "artificial spike" driven by the enormous capital of big tech companies — a surge unlike anything in history and, he said, the largest of its kind ever recorded. That dynamic, he said, has produced shortages across the board, including in DRAM.

"Once things reach a certain level, the market will move toward equilibrium and gradually become saturated — but it is hard to predict how long that will take or how quickly it will happen," Yang said. He warned, however, that a glut could emerge if chipmakers scramble to expand capacity just as the boom begins to cool. "Until now, the industry has gradually scaled up in line with demand, keeping capacity just slightly below demand. Right now, capacity is far below demand — and that is a very unconventional situation," he said.

When such an oversupply materializes, DRAM will be at the center of the problem. The two previous semiconductor "chicken games" were both defined by a brutal price war over DRAM — and that, Yang said, is precisely why foundry matters.

"In memory, once a new generation of technology arrives, the old equipment becomes worthless. But in foundry, even legacy equipment keeps printing money. The financial stability is extraordinarily powerful," he said. "An investment in foundry can generate returns for 20 to 30 years, whereas memory equipment has a useful life of five to seven years at most. The return on investment simply cannot match foundry."

A foundry operator, Yang added, has no stake in who wins the battle between Nvidia, AMD and others in CPUs and GPUs — because all of them are its customers. "If you look at historical data, Intel and Samsung's sales swing wildly with market conditions, but TSMC has always grown steadily," he said. "That is because TSMC does not depend on any single product."

Yang said Samsung Electronics has sufficient technology but will struggle to become a true rival to TSMC. The core of the foundry model, he argued, is the customer — which demands a service mindset, or in his words, an extreme "slave mentality." Samsung, however, has grown accustomed to a product-centric business model spanning televisions, smartphones and memory chips, leaving it with what he called a "big-power mentality." Taiwanese companies like TSMC, by contrast, developed in a domestic market too small to absorb finished consumer products, pushing them toward OEM manufacturing from the start. TSMC and Samsung, he said, have fundamentally different cultural DNA.

Yang also said the memory supercycle that has run since last year is, paradoxically, holding Samsung's foundry ambitions back. "There is a Chinese saying: 'Success is the mother of failure.' You need failure to achieve success — but because memory is doing so well, there is absolutely no pressure to change or pivot," he said. "The memory boom leaves no bandwidth to focus on foundry, and that is unlikely to change. People inside Samsung's foundry division already feel like second-class citizens next to the memory side."

"It is very hard for a small new-business unit to survive inside a giant corporation — and that is exactly why Samsung needs to spin off foundry as a separate company," Yang said. "Unless both memory and foundry are world-class and can be offered together as one seamless system, having the two divisions under the same roof is either unattractive or unlikely to generate meaningful synergy." The remarks amount to a direct challenge to Samsung Electronics' strategy of positioning itself as an integrated device manufacturer, or IDM, that leverages combined strengths in memory, foundry and packaging.

For Samsung foundry to succeed, Yang said, a spinoff must bring in outside talent from leadership down to the execution level to build a new culture, and the company must abandon the ambition of excelling at every process node — instead concentrating 100 percent of its capabilities on the specific processes and nodes where it is strongest. Yang added that without the backing of the US government, Intel would be no match for Samsung. Samsung's technology is already solid, he said, and if it can change its execution and organizational culture, it has what it takes to become a foundry powerhouse.

Asked whether sub-1-nanometer processes are achievable, Yang said nodes of 7 angstroms, 5 angstroms and 3 angstroms will all emerge in due course. "But I can say with confidence that the numbers attached to these future nodes will have nothing to do with the actual physical geometry inside the chip," he said. "Single-chip planar shrinkage has reached its limits. Advanced packaging — integrating different chips into one — has already become the decisive battleground, and it is already the dominant trend." That, he said, is why the industry must focus on packaging technology.