Samsung forms contract chip manufacturing division

Samsung Electronics CEO Kwon Oh-hyun

Samsung Electronics CEO Kwon Oh-hyun

Aiming to lure more semiconductor customers, Samsung Electronics Co.

Samsung Electronics Co. backed by cutting-edge nanometer chip-making technology said Friday that it will be creating separate foundry division to expand dominance in pure-play foundry business amid a boom in demand for semiconductors.

The new division will make mobile processors and other non-memory chips for clients such as Qualcomm and Nvidia, competing with TSMC.

The move is unlikely to surprise. 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. Analysts had speculated that the firm would eventually split apart 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.

Samsung has expanded its investment in the foundry business, including opening the world's 10-nanometer chip manufacturing plant a year ago.

In 2016, Taiwan-based TSMC stood as the leading player in the foundry sector, followed by another Taiwanese firm UMC and US -based GlobalFoundries. 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 meant to consolidate control of the country's largest conglomerate. Jay Y. Lee was arrested in South Korea, for his alleged role in an ongoing political scandal involving impeached President Park Geun-Hye.

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