Samsung Eyes Major Chip Division Merger to Boost Sub-2nm Goals

Samsung’s chip division has long been a cornerstone of the company’s revenue and profits. However, in recent years, its semiconductor business has faced mounting challenges. Among its various divisions, System LSI—the unit responsible for designing Exynos processors, ISOCELL camera sensors, and other sensor technologies—has been struggling the most. This has reportedly prompted Samsung to consider a major restructuring.

According to a report from SEDaily, senior executives at Samsung Electronics recently held a strategic meeting to determine the future of System LSI. Following a review of the performance of all Samsung Electronics business units, three possible options were discussed: merging System LSI with Samsung MX (the mobile device division), merging it with Samsung Foundry (the chip manufacturing unit), or undergoing a large-scale internal restructuring.

While no final decision was made during the meeting, insiders say the proposal to merge System LSI with Samsung Foundry is gaining the most traction. Additional high-level discussions are expected before a final verdict is made by Vice Chairmen Chung Hyun-ho (Business Support TF) and Jeon Young-hyun (Samsung Device Solutions), with input from Samsung Electronics Chairman Jay Y. Lee.

System LSI was previously part of Samsung Foundry until 2017, when it was separated to prevent potential conflicts of interest with Foundry clients like Qualcomm and Nvidia. The separation was aimed at reassuring external partners that their proprietary designs would be kept confidential. Now, however, there is growing internal support for reuniting the two divisions, particularly in light of Samsung’s push to succeed in sub-2nm chip design and manufacturing—a goal that requires closer integration between design and fabrication.

For those unfamiliar with Samsung’s internal structure, here’s a brief overview of the key divisions involved:

• Samsung Device Solutions (DS): This umbrella division includes Samsung Foundry, Samsung Memory, and System LSI.

• Samsung Foundry: The semiconductor manufacturing arm, responsible for producing chips for both internal use and external clients like Nintendo, Nvidia, and Qualcomm.

• System LSI: A division focused on designing processors and sensors, including Exynos chips and ISOCELL image sensors, used in a variety of devices from smartphones to automotive systems. These designs are typically manufactured by Samsung Foundry.

• Samsung MX (Mobile Experience): The division responsible for developing and producing Samsung’s smartphones, tablets, wearables, and laptops. It was merged with the DX division several years ago.

• Samsung DX (Device eXperience): This group oversees the development of consumer electronics such as TVs, monitors, and home appliances including air conditioners, refrigerators, and washing machines.

Should Samsung go ahead with the merger of System LSI into Samsung Foundry, it risks unsettling its fabless clients, such as Qualcomm and Nvidia, who may fear that their chip designs could be compromised. Such concerns could drive these companies to seek alternative manufacturing partners.