Samsung creates new contract chip manufacturing unit

Samsung Electronics is splitting its semiconductor business in half in a bid to capitalise on growing interest in its chips. The technology giant has announced the creation of a breakaway contract chip manufacturing unit within its semiconductor business.

Kim Ki-nam, who currently oversees all chip-related activity at the company, will head the new division up. The unit will be responsible for carrying out chip manufacturing contracts for clients such as Nvidia and Qualcomm.

Rumoured for a while, the move to split the company in half will come as no real surprise to many business analysts. Although just a drop in the ocean of Samsung’s overall profits, its foundry business saw revenue rise by around 86 per cent to $4.7 billion in 2016.

The move will see a split between its foundry and system chip operations to make them more efficient and ease concerns from customers about potential leaks to parts of Samsung that compete with them. It is seen as a step towards the company’s vision to expand its presence in the chip manufacturing sector in order to be a key global player.

Just last month, Samsung announced that it has finalised the development of second-generation 10-nanometer FinFET process technology, in a bid to secure more contract clients. Samsung is currently the fourth biggest company in the foundry sector, with Taiwan-based TSMC leading the way, followed by UMC and US firm GlobalFoundries.

Yesterday, Samsung announced that it was reshuffling its executive members, following the arrest of its vice president. Jay Y. Lee was arrested in South Korea, for his alleged role in an ongoing political scandal involving impeached President Park Geun-Hye. The heir of the Samsung empire is accused of paying around $38 million in bribes to Park’s long time confidante, Choi Soon-Sil, in order to secure a controversial merger between Samsung C&T and Cheil Industries, which prosecutors say was intended to consolidate control of the country’s largest conglomerate.

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