Samsung Electronics recently secured subsidies worth $6.4 billion from the US government, aiming to create a comprehensive semiconductor ecosystem with over $40 billion in investments in the country. While this news should be positive for the company, the market response has been tepid. Concerns are arising regarding the profitability of Samsung’s investments and whether they will match the amount invested.
Analysts predict that the ongoing foundry race in the US will be a key determinant of success for companies in the semiconductor industry. Therefore, the question remains as to who will emerge as the winner in this race.
Following the US subsidy announcement, Samsung Electronic’s share prices experienced a decline, finishing trading at 80,000 won, down by 2.68% from the previous day. Institutional investors contributed to the selloff trend, resulting in a sharper decline compared to the overall market.
Despite the positive impact that acquiring customers in North America could have for Samsung Electronics, uncertainties surrounding the overall competition in the US market limit the potential gains in profitability. Intel, for example, is set to receive up to $8.5 billion in subsidies from the US government in its pursuit of becoming the world’s second-ranked foundry company by 2030. Additionally, TSMC plans to expand its production facilities in Arizona.
An analyst with NH Investment and Securities suggested that the market’s reservation of judgment could be due to the lack of final orders from major North American client companies. The scale of Samsung’s subsidies, which is similar to what TSMC is receiving, has also not raised expectations significantly.
Furthermore, Samsung Electronics faces challenges related to operating state-of-the-art fabs in the US. The company plans to produce advanced semiconductors overseas for the first time by introducing 2 nm semiconductors in the US as early as 2026. However, the shrinking semiconductor manufacturing workforce in the US and the high costs associated with production pose additional risks.
Overall, despite the US subsidies, the market remains cautious about Samsung Electronics’ future profitability and the intense competition in the US foundry industry. Only time will tell how successful the company’s investments in the US will be.
Samsung Electronics’ recent acquisition of subsidies worth $6.4 billion from the US government has raised concerns about the company’s profitability and the potential return on investment. The market response to this news has been tepid, with Samsung’s share prices experiencing a decline. Analysts predict that the ongoing foundry race in the US will be a determining factor in the success of companies in the semiconductor industry.
The competition in the US foundry industry is fierce, and the race to emerge as the winner is still ongoing. Intel, for example, is set to receive up to $8.5 billion in subsidies from the US government in its pursuit of becoming the world’s second-ranked foundry company by 2030. TSMC also plans to expand its production facilities in Arizona, contributing to the competitive landscape.
One of the reasons for the cautious market sentiment is the lack of final orders from major North American client companies. Without concrete customer agreements, the potential gains in profitability for Samsung Electronics remain uncertain. The scale of Samsung’s subsidies, which is comparable to what TSMC is receiving, has not significantly raised expectations either.
Operating state-of-the-art fabs in the US poses additional challenges for Samsung Electronics. The company aims to produce advanced semiconductors overseas for the first time by introducing 2 nm semiconductors in the US by 2026. However, there are concerns about the shrinking semiconductor manufacturing workforce in the US and the high costs associated with production.
Despite the subsidies, the market remains cautious about Samsung Electronics’ future profitability in the US foundry industry. The intense competition and uncertainties surrounding customer orders and operational challenges pose risks to the company’s investments. Time will tell how successful Samsung’s endeavors in the US will be.
For more information related to the semiconductor industry and market forecasts, you can visit reputable sources like Semiconductor Industry Association or MarketsandMarkets.
The source of the article is from the blog agogs.sk