Samsung Foundry Struggles to Close the Gap with TSMC Despite Market Efforts

Samsung Foundry, a key player in the semiconductor manufacturing world, continues to face tough challenges in competing with TSMC, the industry’s leader. While Samsung Electronics experienced some growth in its semiconductor division in early 2025, it remains far behind TSMC in terms of revenue and market momentum. This article explores the latest financial figures, the root causes behind Samsung’s difficulties, and what this means for the future of the global semiconductor market.

Samsung’s semiconductor division posted a 9% increase in earnings in the first quarter of 2025 compared to the previous quarter. Yet, this growth masks a deeper struggle — a 17% drop compared to the same period last year. Meanwhile, TSMC continues to surge forward, recording \$26.4 billion in revenue for Q1 2025, marking a staggering 42% increase year-over-year. Samsung’s semiconductor revenues stood at \$16.97 billion during the same period, meaning TSMC outpaced Samsung by more than \$7 billion in just three months.

Samsung’s leadership has cited several factors for its muted performance, including seasonal demand fluctuations and stagnant utilization rates in their foundry business. Samsung made headlines in 2021 when it overtook Intel as the world’s largest semiconductor company by revenue, largely thanks to a booming memory market. Samsung dominated the memory chip sector during a super cycle, capitalizing on soaring demand. However, since the third quarter of 2023, this momentum has faded. The memory market slowed dramatically and has not bounced back, allowing TSMC to overtake Samsung in overall semiconductor sales.

Looking ahead, TSMC projects even higher revenues in Q2 2025, which could widen the revenue gap with Samsung further. Samsung’s semiconductor division remains under pressure to innovate and find new growth avenues amid ongoing challenges.

Samsung’s current situation reveals much about the shifting dynamics within the semiconductor industry. The contrast between Samsung and TSMC highlights how leadership in this field depends not just on manufacturing scale but also on strategic agility and market focus. Samsung’s past success came largely from memory chips, a segment experiencing cyclical demand patterns, while TSMC’s strength lies in advanced logic chips used in everything from smartphones to AI hardware. As technologies evolve rapidly, foundries focusing on cutting-edge process nodes and diverse customer bases appear more resilient.

The revenue gap exceeding \$7 billion in a single quarter is more than just a number—it symbolizes the shifting balance of power. Samsung’s difficulty in attracting customers for its advanced processes hints at deeper issues in technology leadership and client trust. TSMC’s consistent revenue growth and optimistic forecast demonstrate strong demand for its leading-edge chip manufacturing, crucial for the next generation of devices.

Samsung faces the challenge of breaking free from memory market cycles and boosting its foundry business by advancing process technologies and capturing high-value customers in the logic chip segment. This transformation isn’t simple—Samsung must invest heavily in R\&D, enhance production yields, and deliver competitive pricing while navigating geopolitical supply chain complexities.

The company’s ability to innovate and execute these strategies will determine if it can narrow the gap with TSMC or if it will fall further behind. The foundry market is fiercely competitive, and a growing lead by TSMC could cement its dominant position for years to come. For Samsung, the pressure to evolve and diversify is urgent, and the semiconductor division’s future growth depends on strategic shifts beyond memory chip dominance.

What Undercode Say:

Samsung’s recent performance underscores the volatile nature of the semiconductor industry, where success depends on more than past dominance. While Samsung was once riding high due to its control of the memory chip market, the sector’s cyclical downturn exposed vulnerabilities in its revenue streams. Meanwhile, TSMC’s focus on cutting-edge logic chip manufacturing, serving customers like Apple and Nvidia, has positioned it as the preferred partner for next-gen technology.

The \$7 billion revenue difference between TSMC and Samsung in Q1 2025 reflects more than just sales numbers—it highlights which technologies and customer segments are driving growth in this era. Samsung’s reliance on memory, a commodity-like product vulnerable to oversupply and demand fluctuations, contrasts with TSMC’s portfolio of customized, high-margin chips essential for AI, 5G, and other expanding tech markets.

Samsung’s seasonal demand challenges and low utilization rates suggest that the company is struggling to maintain efficiency and customer engagement in its foundry operations. This is critical because foundries rely on steady orders and high factory utilization to be profitable. Without innovation in process technology and a clear strategy to attract leading-edge chipmakers, Samsung risks losing further ground.

Looking deeper, Samsung’s predicament also points to the broader theme of technological leadership. In semiconductor manufacturing, advancing process nodes and ensuring supply chain resilience are key to winning contracts from premium customers. TSMC’s aggressive expansion into 3nm and 2nm processes demonstrates its commitment to future tech leadership. Samsung must match or exceed this to stay relevant.

Furthermore, geopolitical tensions and supply chain uncertainties push semiconductor companies to diversify production and solidify partnerships. Samsung’s ability to leverage its integrated manufacturing ecosystem—spanning memory and logic chips—could be an advantage if properly capitalized on. Yet, for now, TSMC’s specialization and customer trust give it a decisive edge.

In conclusion, Samsung’s foundry struggles reflect the harsh realities of a tech race where innovation, customer relationships, and execution matter above all. Samsung can still reclaim ground if it accelerates investments in advanced process technologies, improves factory utilization, and diversifies its portfolio beyond memory. The company’s next moves will shape not only its own future but also the balance of power in the semiconductor world.

Fact Checker Results:

Samsung’s semiconductor division revenue for Q1 2025 was approximately \$16.97 billion, confirming the reported figure.
TSMC’s revenue in the same period reached about \$26.4 billion, validating the \$7 billion lead.
Market analysis confirms the slowdown in memory chip demand since Q3 2023, impacting Samsung’s growth trajectory.

Prediction:

If current trends persist, TSMC will continue to widen its lead over Samsung throughout 2025. Samsung’s best chance to close the gap lies in aggressive innovation in advanced logic chip manufacturing and strategic partnerships with leading tech firms. Without significant improvements in these areas, Samsung risks becoming increasingly dependent on the volatile memory market, limiting its growth potential. In the long run, the semiconductor industry may see a more pronounced split, with TSMC dominating premium foundry services while Samsung maintains strength in memory and selective logic segments.