Latest news with #SamsungElectronics'
Korea Herald
4 days ago
- Business
- Korea Herald
Spinoff or stay? Samsung's foundry dilemma back in spotlight
Experts say spinning off lackluster foundry could boost trust, competitiveness, but Samsung says it's too early Samsung Electronics is again facing speculations that it may spin off its foundry business from the broader semiconductor division, amid concerns over the same conflicts of interest that drove Samsung Biologics to split its biosimilar business and contract drug manufacturing. Last week, Samsung Biologics, the biotech arm of Samsung Group, announced it will spin off its biosimilar subsidiary Samsung Bioepis into an independent entity. Once the deal is completed, Samsung Biologics will only retain its contract development and manufacturing organization, a strategic move aimed to address growing customer and investor concerns about potential conflicts of interest in its competing business lines. A similar conflict of interest conundrum has long weighed on Samsung Electronics' Device Solution division, which houses three distinct yet interconnected semiconductor operations under one roof: memory chips, foundry and System LSI. While the foundry manufactures chips for fabless companies, System LSI is responsible for designing logic chips, including Samsung's own Exynos. This dual role as both a chip designer and a manufacturer has raised concerns over possible technology leakage and inherent conflicts of interest for years. 'Trust is critical in the foundry business," said an industry source who requested anonymity. "For fabless companies like Nvidia and Qualcomm that don't manufacture their own chips and rely on foundries, there's always concern that sensitive design data could be exposed to competitors. Spinning off the foundry business would reduce these risks and make Samsung more competitive." Growing calls for spinoff Many market analysts have been calling on Samsung to carve out its foundry unit, arguing that organizational independence would help the company respond quickly to clients' demands and scale faster to keep up with technological advancement. Even the conglomerate's financial subsidiary Samsung Securities, recommended that Samsung spin off the foundry and list on the US market in a 2022 report. The broader semiconductor industry is also moving away from integrated device manufacturer models like Samsung -- where a single company handles both chip design and manufacturing -- toward a more specialized structure such as a fabless-foundry partnership. A fellow IDM Intel is also reportedly exploring a similar path, considering spinning off its foundry unit, potentially as a joint venture with TSMC. Another factor driving the spinoff discussion is financial. Analysts say Samsung's underperforming foundry unit is dragging down Samsung Electronics' bottom line. In the first quarter of 2025, Samsung's DS division reported revenue of 25.1 trillion won ($18.17 billion) and an operating profit of 1.1 trillion won, down 42 percent on-year and marked the third consecutive quarter of decline. This figure falls far short of the 7 trillion won profit posted by smaller chipmaking rival SK hynix posted during the same period. While Samsung does not disclose performance by specific business unit, industry sources estimated that memory chip operations posted around 3 trillion won in operating profit, which was offset by 2 trillion won losses in System LSI and foundry. This sluggish performance of its non-memory chip units strengthens the argument for a spinoff, yet paradoxically, this same weakness makes near-term divestiture less feasible. Too early to split? 'In principle, Samsung's spinoff would be ideal, similar to TSMC, whose specialization in foundry services has earned trust from customers,' said Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University. 'But right now, Samsung foundry remains in the red, and splitting off under these conditions would be meaningless. The company must first return to profitability and then consider a spinoff when it's ready. It's too early for now." Given the capital-intensive nature of the foundry business, any separation would require a stable revenue stream and securing major clients, both of which Samsung currently lacks, observers say. If Samsung were to spin off its foundry unit, it would lose key advantages of operating under the umbrella of Samsung Electronics. Despite continued losses, the foundry has managed to stay afloat and conduct large-scale investments, largely due to the tech giant's strong earnings from its memory and consumer electronics businesses, including smartphones. Amid growing speculation, Samsung is not considering a spinoff of its foundry unit at this time, according to a source familiar with the matter. Even Samsung Electronics Chair Lee Jae-yong appears reluctant on the idea. 'We are hungry to grow the business. Not interested in spinning (them) off,' Lee told Reuters last October in the Philippines, when asked whether the tech giant is considering spinning off the foundry. Professor Lee noted that Samsung envisions becoming a successful IDM capable of excelling in both memory and non-memory. In an era where AI chips are reshaping the semiconductor industry, Samsung could gain a competitive edge if it can develop and produce AI critical high-bandwidth memory chips entirely in-house. "Samsung first needs approval from Nvidia for its HBM chips to become a trusted AI chip supplier," said Professor Lee. "If that happens everything changes. But until then, the priority is profitability. Only after that can a spinoff or any kind of restructuring make strategic sense."
Korea Herald
4 days ago
- Business
- Korea Herald
Hyundai E&C's Hillstate Yongin complex sees strong demand
Hyundai Engineering and Construction is seeing rapid sales at its latest residential project, Hillstate Yongin Markvalley. Located in Yongin, Gyeonggi Province, the complex consists of seven buildings with up to 27 floors and offers 660 units ranging from 84 to 182 square meters. Buyers can freely select their preferred unit and floor without the need for a housing subscription savings account or local residency, thereby preserving eligibility for future housing lotteries. One key factor driving demand is the upcoming tightening of mortgage regulations under the government's third phase of its stressed debt service ratio rules, which take effect in July. However, units contracted before June 30 will still fall under the more favorable Phase 2 regulations, allowing for more flexible financing. To further ease the financial burden on buyers, the initial down payment has been lowered to just 10 million won ($7,200). The development is strategically located near Samsung Electronics' planned 360 trillion won investment in a national advanced semiconductor complex, and is expected to benefit from significant long-term value appreciation. The area is also being boosted by improving transportation links, including the Seoul-Sejong Expressway and upcoming rail and road infrastructure projects. Residents will enjoy premium amenities, along with Hyundai E&C's "my HILLS" platform, which offers services such as maintenance requests, energy usage tracking and visitor scheduling. A Hyundai E&C official noted, 'We have seen a strong response due to the project's favorable financing conditions, strategic location and long-term growth potential.'
5 days ago
- Business
World shares are mixed after a Japanese government bond auction falls flat
World shares are mixed after a closely watched auction of 40-year Japanese government bonds fell flat as worries mount over growing levels of debt. In early European trading, Germany's DAX gained 0.2% to 24,283.71, while the CAC 40 in Paris was up 0.3% at 7,847.20. Britain's FTSE 100 rose 0.2% to 8,794.80. The future for the S&P 500 slipped 0.1% while that for the Dow Jones Industrial Average was down 0.2%. In Asian trading, Japan's Nikkei 225 index was nearly unchanged at 37,722.40. Government debt and bonds have become an increasingly important issue for markets in wealthy countries in recent weeks as yields have climbed around the world. Wednesday's auction of about 500 billion yen (about $3.5 billion) drew a bid-to-cover ratio of just 2.21, the lowest level since July 2024. The ratio of the amount of bonds offered versus the amount of bids received is seen as a measure of demand. When demand is slack, bond prices fall and yields rise. After years of pumping money into the economy through hefty bond purchases, Japan's central bank has been gradually cutting back, undermining demand at a time when other institutional investors also have been buying fewer JGBs. A recent auction of 20-year JGBs also found relatively few buyers. But analysts said worries eased a bit after Japan's Finance Ministry recently sent a questionnaire to bond investors that they took as a signal of efforts to calm the market by suggesting it might issue less debt. When yields softened earlier in the week in Japan, the bond market rallied, Thomas Matthews of Capital Economics said in a report. The 'somewhat soft 40-year JGB auction seems to have contributed to a slight souring of the global mood,' he said. The dollar fell to 144.16 Japanese yen from 144.36 yen. The euro rose to $1.1322 from $1.1329. Elsewhere in the region, Hong Kong's Hang Seng index lost 0.5% to 23,258.31, while the Shanghai Composite index ended flat at 3,393.93. Australia's S&P/ASX 200 edged 0.1% higher to 8,396.90. The S&P/NZX 50 in New Zealand fell 1.8% after the central bank cut its benchmark interest rate by 0.25 percentage points, as expected, to 3.25%. In South Korea, the Kospi jumped 1.3% to 2,670.15, helped by a global rally in technology shares. Samsung Electronics' shares climbed 3.7% while SK Hynix was up 2.7%. In Taiwan, the Taiex added 0.1%. India's Sensex slipped 0.1%. Oil prices rose after the U.S. authorization to Chevron to export crude from Venezuela expired Tuesday. The Trump Administration has been trying to wind down U.S. reliance on Venezuelan energy. U.S. benchmark crude oil gained 45 cents to $61.35 per barrel. Brent crude, the international standard, was up 42 cents at $63.99 per barrel. On Tuesday, Wall Street resumed its roller coaster ride created by U.S. President Donald Trump's trade policies after he delayed his threatened 50% tariff on imports from the European Union. U.S. markets were closed for Memorial Day on Monday, and the S&P 500 leaped 2.1% in its first trading since Trump's announcement. The Dow Jones Industrial Average added 1.8% and the Nasdaq composite gained 2.5%. Nvidia rallied 3.2% and was the strongest single force driving the S&P 500 higher ahead of its profit report coming on Wednesday. It's the last to report this quarter among the 'Magnificent Seven' Big Tech companies. Talks with the EU have raised hopes the United States can reach a deal with one of its largest trading partners, helping to keep global commerce moving and avoiding a possible recession. Trump declared a similar pause on his stiff tariffs for products coming from China earlier this month, which launched an even bigger rally on Wall Street at the time. Surveys have shown U.S. consumers are concerned over the economy's prospects and where inflation may be heading because of tariffs. However, a report Tuesday by the Conference Board said confidence among U.S. consumers has improved more in May than economists expected. .
New Indian Express
5 days ago
- Business
- New Indian Express
Asian shares are mostly higher after S&P 500 rallies 2 percent
Asian shares were mostly higher on Wednesday after President Donald Trump's decision to delay a 50% tariff on goods coming from the European Union sparked a rally on Wall Street. US futures were little changed and oil prices rose. Japan's Nikkei 225 gained 0.5% to 37,918.86 and traders were awaiting the outcome of an auction of 40-year Japanese government bonds. Government debt and bonds have become an increasingly important issue for markets in recent weeks as yields have climbed around the world. The 40-year JGB's yield is at a record 3.5% and a recent auction found relatively few buyers. But analysts said worries eased a bit after Japan's finance ministry sent a questionnaire to bond investors that they took as a signal of efforts to calm the market. The dollar slipped against the Japanese yen, trading at 144.33 yen down from 144.36 yen. The euro fell to $1.1312 from $1.1329. Elsewhere in the region, Hong Kong's Hang Seng index lost 0.3% to 23,304.51, while the Shanghai Composite index edged 0.1% higher to 3,342.36. Australia's S&P/ASX 200 gained 0.2% to 8,425.10. The S&P/NZX 50 in New Zealand fell 1.8% after the central bank cut its benchmark interest rate. In South Korea, the Kospi jumped 1.8% to 2,685.44, helped by a global rally in technology shares. Samsung Electronics' shares climbed 3.3% while SK Hynix was up 3%.
The Hill
5 days ago
- Business
- The Hill
Asian shares are mostly higher after S&P 500 rallies 2%
Asian shares were mostly higher on Tuesday after President Donald Trump's decision to delay a 50% tariff on goods coming from the European Union sparked a rally on Wall Street. U.S. futures were little changed and oil prices rose. Japan's Nikkei 225 gained 0.5% to 37,918.86 and traders were awaiting the outcome of an auction of 40-year Japanese government bonds. Government debt and bonds have become an increasingly important issue for markets in recent weeks as yields have climbed around the world. The 40-year JGB's yield is at a record 3.5% and a recent auction found relatively few buyers. But analysts said worries eased a bit after Japan's finance ministry sent a questionnaire to bond investors that they took as a signal of efforts to calm the market. The dollar slipped against the Japanese yen, trading at 144.33 yen down from 144.36 yen. The euro fell to $1.1312 from $1.1329. Elsewhere in the region, Hong Kong's Hang Seng index lost 0.3% to 23,304.51, while the Shanghai Composite index edged 0.1% higher to 3,342.36. Australia's S&P/ASX 200 gained 0.2% to 8,425.10. The S&P/NZX 50 in New Zealand fell 1.8% after the central bank cut its benchmark interest rate. In South Korea, the Kospi jumped 1.8% to 2,685.44, helped by a global rally in technology shares. Samsung Electronics' shares climbed 3.3% while SK Hynix was up 3%. In Taiwan, the Taiex added 0.4%. Oil prices rose after the U.S. authorization to Chevron to export crude from Venezuela expired Tuesday. The Trump Administration has been trying to wind down U.S. reliance on Venezuelan energy. U.S. benchmark crude oil gained 33 cents to $61.22 per barrel. Brent crude, the international standard, was up 31 cents at $63.88 per barrel. On Tuesday, Wall Street's roller-coaster ride created by Trump's trade policies resumed following the delay for his tariffs on the European Union. U.S. markets had been closed for Memorial Day on Monday, and the S&P 500 leaped 2.1% in its first trading since Trump's announcement. It closed at 5,921.54. The Dow Jones Industrial Average added 1.8% to 42,343.65, and the Nasdaq composite gained 2.5% to 19,199.16. Wall Street's roller coaster had dropped Friday after Trump announced the tariffs on France, Germany and the other 25 countries represented by the European Union. Talks with the EU have raised hope the United States can reach a deal with one of its largest trading partners, helping to keep global commerce moving and avoiding a possible recession. Trump declared a similar pause on his stiff tariffs for products coming from China earlier this month, which launched an even bigger rally on Wall Street at the time. The uncertainty caused by on-again-off-again tariffs are leaving households and businesses wary about spending and investments. Surveys have already shown U.S. consumers are feeling worse about the economy's prospects and where inflation may be heading because of tariffs. However, a report Tuesday by the Conference Board said confidence among U.S. consumers has improved more in May than economists expected. It was the first increase in six months, and consumers' expectations for income, business and the job market in the short term jumped sharply, though they remain below the level that typically signals a recession ahead. About half the survey results came after Trump paused some of his tariffs on China. On Wall Street, Nvidia rallied 3.2% and was the strongest single force driving the S&P 500 higher ahead of its profit report coming on Wednesday. It's the last to report this quarter among the 'Magnificent Seven' Big Tech companies. Nvidia has been riding a tidal wave of growth created by the frenzy around artificial-intelligence technology, but it's facing criticism that its stock price has shot too high. Informatica climbed 6% after Salesforce said it would buy the AI-powered cloud data management company in an all-stock deal valuing it at about $8 billion. Salesforce rose 1.5%. Treasury yields eased to take some of the pressure off the stock market. The yield on the 10-year Treasury fell to 4.44% from 4.51% late Friday. It had been rising last week, in part because of worries about the U.S. government's rapidly increasing debt. ___ AP Business Writers Matt Ott and Stan Choe contributed.
