Samsung Halts Construction of Semiconductor Factories in South Korea and the United States

Recently, Samsung Electronics announced that it had suspended its P4 factory in Pyeongtaek, South Korea and the Plant 2 semiconductor factory in Taylor, USA. This news quickly attracted widespread attention from the global semiconductor industry. According to South Korean media Digital Daily, Samsung not only suspended the construction process of the above two factories, but also postponed the ordering of related equipment and facilities, which shows that the company has adopted a more cautious and conservative strategy in semiconductor investment.

According to Samsung’s official statement, the company is re-evaluating its global production and operation strategy to cope with the current uncertainty in the global semiconductor market. Samsung said that this decision was made based on prudent consideration of future market demand and in-depth analysis of the profitability of the semiconductor industry. Originally, Samsung planned to invest $44 billion in the United States to build two semiconductor factories and an advanced packaging R&D center, and had received $6.4 billion in government subsidies. However, under the influence of multiple factors such as the global economic recession, reduced demand in the memory semiconductor market, and fierce competition in the foundry market, Samsung is considering whether to continue to promote these investment projects.

In fact, the market has long been full of speculation and discussion about the future direction of Samsung Electronics’ upcoming Pyeongtaek P4 production line and Plant 2 semiconductor factory in Taylor, USA. These speculations not only reflect the industry’s keen perception of the dynamic changes in the semiconductor market, but also reflect the flexibility and complexity of Samsung’s strategic planning as an industry giant.

Among them, the discussion about the Pyeongtaek P4 production line is particularly heated. Some people believe that in view of the subtle changes in the current global semiconductor market, especially the difference in demand between the foundry and memory semiconductor markets, Samsung may make strategic adjustments to its P4 production line, which was originally planned as a pure foundry production. One of the more common speculations is that Samsung may withdraw part of the production capacity of the P4 production line from the originally scheduled foundry production and invest it in the production of memory semiconductors. This adjustment is intended to better adapt to changes in market demand, especially when the demand in the memory market picks up, to respond quickly and seize market opportunities.

Another voice argues that Samsung may choose to temporarily shelve part of the construction of the P4 production line and adopt a “wait-and-see” strategy. This approach is based on a cautious judgment of market trends, that is, in the context of the current uncertainty of the global economic environment and the cyclical fluctuations of the semiconductor industry, a certain degree of flexibility and leeway is maintained so that production plans can be flexibly adjusted in the future according to actual changes in market demand. When the demand for memory semiconductors increases significantly, Samsung will be able to quickly restart these suspended production lines to meet market demand at the lowest cost and highest efficiency.

It is reported that the construction of the Pyeongtaek P4 plant, as the world’s largest wafer production base built by Samsung, began in 2022. The original idea was to build a multifunctional comprehensive facility with similar functions to the P3 plant. The entire project plan is divided into four phases for gradual implementation: the first phase focuses on the production of NAND Flash; the second phase was originally planned for outsourcing foundry business; and the last two phases are set as DRAM production lines. However, in view of the fluctuations in market demand, Samsung has to flexibly adjust its construction strategy and give priority to the expansion of production capacity of core memory products such as NAND and DRAM. There have been recent rumors that Samsung is discussing converting a planned foundry line into a DRAM line.

In addition, Samsung’s foundry in Tyler, Texas, USA, also faces similar challenges. Samsung originally planned to invest $44 billion in the area to build two wafer fabs, focusing on mass production of 4nm and 2nm advanced process technologies, and to build an advanced packaging R&D center to focus on technology research and development ahead of current production nodes. At the same time, it is expected to receive $6.4 billion in funding support from the US government. So far, although the construction of Fab 1 has begun, the project has been delayed several times and is expected to be completed in 2026 and ready to introduce cutting-edge semiconductor production processes at the 5nm and below level. However, the latest developments show that the construction progress of the wafer fab in the second half of this year has been fully reviewed, while the construction plan of Fab 2 has been temporarily shelved. Samsung said it will flexibly adjust its construction strategy according to changes in market demand.

On the other hand, recent news pointed out that due to the yield problem of 2nm process technology, the 2nm wafer fab project originally planned to be launched in Tyler in the second half of 2024 was forced to be significantly postponed, and the team formed in the early stage has also withdrawn. The latest report confirms this, clearly stating that Samsung’s 2nm wafer fab project in Taylor City has been suspended, and related outsourcing cooperation projects have also come to a standstill.

The suspension of the construction plan is one of the latest in a series of adjustments made by Samsung recently. Prior to this, Samsung has taken a series of measures to cope with industry challenges and its own development bottlenecks. Among them, the most eye-catching is the announcement of a global layoff of up to 10%, which aims to cut unnecessary expenses, improve operational efficiency, and ensure that the company remains flexible and competitive in the fierce market competition. At the same time, the decision to close some mobile phone business segments also shows that after reviewing its own business structure, Samsung has decided to focus resources on areas with greater growth potential and profitability to promote the company’s long-term development. These moves have aroused the market’s attention to Samsung’s future development direction.

As an important player in the global semiconductor industry, any strategic adjustment by Samsung may herald a new trend in the development of the industry. The suspension of some facilities may reflect Samsung’s cautious attitude towards the future direction of the semiconductor industry. Although the specific reasons for the suspension have not been officially detailed, facing the uncertainty of market demand and the complexity of the global supply chain, Samsung may be maintaining its competitiveness in the global market by optimizing resource allocation and adjusting the production rhythm.