Samsung Foundry Cuts Labor Costs to Improve Earnings, Redeploys Some Staff to System LSI Business [Samsung Foundry 'Spreads Its Wings']

The Device Solutions (DS) Division of Samsung Electronics is betting heavily on an early rebound in the performance of its foundry (contract chip manufacturing) business. Some foundry staff engaged in non-memory production are being reassigned to the System LSI Business, which handles non-memory chip design. The move is seen as an attempt to ease the labor cost burden on the Samsung Electronics Foundry Business by taking advantage of an internal structure where costs are recognized differently depending on which unit the same workers belong to, even if they perform the same processes. Although the System LSI Business, another key non-memory pillar alongside the foundry business, is also struggling with weak earnings, the company plans to prioritize "saving the foundry" first.
According to industry sources on the 16th, some employees at the Samsung Electronics Foundry Business who had been responsible for legacy (older-generation) processes have been transferred to the System LSI Business, which designs image sensors and other products. The System LSI Business won a design order in August last year for next-generation image sensors to be used in new Apple iPhone models, and it is reportedly seeking to accelerate related work through this move.
Internally, however, many interpret this adjustment less as a step to strengthen System LSI’s competitiveness and more as a decision made for the sake of the foundry business. An industry official explained, "If you design image sensors, you ultimately have to use the foundry lines for production anyway, so the actual work being done does not change much," adding, "It is essentially a structure where only the organization is moved to System LSI." The official went on, "In that case, labor costs are booked under the System LSI Business, and they no longer show up directly in the foundry’s profit and loss," and added, "In effect, it shifts costs to another business unit and reduces the burden on the foundry." In other words, the roles and processes for the staff remain the same, but by changing their organizational affiliation, labor costs that had been charged to the Samsung Electronics Foundry Business are redistributed to System LSI.
The System LSI Business has failed to establish a clear trajectory of earnings improvement and remains in a stagnant phase. The recently launched Samsung Galaxy S26 smartphone series is equipped in large numbers with the Exynos 2600 mobile application processor (AP) designed by the System LSI Business, but analysts say it is still uncertain whether this will translate into a meaningful reduction in losses.
On top of this, the departure of key talent has raised concerns that the organization’s overall momentum could weaken. Lee Je-seok, Chief Technology Officer (CTO) and Executive Vice President of the System LSI Business’s Sensor Business Team, a central figure in the image sensor division, has also reportedly left the company.
soup@fnnews.com Reporter Lim Su-bin Reporter