Reportedly, Samsung design companions for its chip foundry business observe that their operating profits tend to reduce and it almost halved in 2022. Samsung Foundry’s Design Solution Partners ADTechnology, Gaonchips, and Coasia found that their revenue and subsequently operating margin rate were hit heavily by the worldwide economic downturn.
Notably, ADTechnology is Samsung’s largest design partner. The firm recorded 164.2 billion won in revenue and 4.4 billion won in operating profit. This figure reveals that the Operating profit has sunk by 61% as compared to the previous year. Also, the revenue was reduced to halved during the same period of time.
As reciprocal to this, Gaonchips observe that their revenue got increased, although the overall profitability was lowered. Furthermore, in 2022, the company recorded 43.3 billion won in revenue, which apparently an increase of 34.3% year-on-year. Whereas, at the same time, the operating profit dropped by 37.1 billion won over the same time timeline to 3.9 billion won respectively.
Spending cost is the reason for reducing profit
As per Gaonschip, it felt that the increased cost and spendings more on hiring a new team, be the reason for the drop in profit. While Coasia’s performance is very poor among all its partners. Surprisingly its revenue records a hike of 21.8% year-on-year to 463.6 billion won in 2022. Whereas, it recorded 22.4 billion won in operating loss, which is 9 billion won sharply than the previous year. Although, the same loss is not completely caused by business, but also due to its lens module and LED businesses. It is worth noting that Coasia is still getting a profit from its chip venture.
Additionally, one of the other reasons for the decline in earnings of Samsungs foundry partners contrasts with that of its rival TSMC. Its biggest design house partners, comprise GUC and Alchips. Both recorded 926 billion won and 581 billion won in revenue, respectively, last year. Also, both of these were able to maintain an operating margin rate of 10%. As depicted by the source who is aware of the matter reveals that TSMC’s revenue in the foundry sector is comparatively bigger than Samsung’s. Concurrently, the Taiwanese chipmaker adopts six design house partners. In contrast, Samsung Foundry uses more design house partners with respect to its revenue and number of customers.
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