Samsung’s Upgraded Exynos Puts Non-Memory Unit on Track for First Profit in 3 Years

Exynos 2600. Samsung Electronics.

Samsung Electronics’ (005930.KS) non-memory division is expected to return to profit for the first time in three years, driven by improved competitiveness of its in-house mobile application processor (AP), the Exynos, and a string of large orders. Analysts say the strategy Samsung has pursued — absorbing losses while strengthening its in-house chip design and foundry manufacturing capabilities — is now bearing fruit.

According to industry sources on the 23rd, Samsung Electronics’ internal performance tests showed its next-generation AP, the Exynos 2700, outperforming Qualcomm’s upcoming Snapdragon 8 Elite Gen 6 in key categories including central processing unit (CPU), graphics processing unit (GPU), artificial intelligence (AI) computing and power efficiency. The Exynos 2700 is set to be produced on SF2P, the second-generation version of Samsung foundry’s 2-nanometer process (1 nanometer equals one-billionth of a meter).

The Exynos’s revival in competitiveness is also positive for Samsung Electronics’ overall earnings structure. In the first half of the year alone, Samsung spent 7.44 trillion won ($5.4 billion) buying APs from suppliers such as Qualcomm and MediaTek. If Galaxy smartphones come to use more Exynos chips, the Mobile Experience (MX) division that runs the smartphone business could lower its component costs. The foundry division, which produces the Exynos, could secure a steady stream of internal orders and, in turn, raise the utilization rate and yield of its advanced processes.

Samsung foundry won orders in the second half of last year for Tesla’s AI5 and AI6 chips and Apple’s next-generation image sensor (CIS). This year, it signed an agreement to pursue a $200 billion memory and foundry business partnership with Broadcom. With its 4-nanometer process now running at effectively full capacity, internal orders are expanding on top of the Big Tech contracts.

Its pricing power is also rising. Samsung is reported to have raised prices for its 4-nanometer and 5-nanometer foundry services by up to 15%, mainly on new orders. On that basis, Kiwoom Securities (039490.KS) forecast that the non-memory division, including the foundry, would post a profit of 151 billion won ($110 million) in the third quarter this year. If realized, it would mark the first profit in 15 quarters, since the fourth quarter of 2022. “The foundry’s utilization rate is rising, and supply prices are also improving favorably,” an industry official said.

[Captured from Samsung Electronics’ official website]Samsung Electronics’ AP ‘Exynos 2600’/Captured from Samsung Electronics YouTube