Samsung creates a new division for contract chip manufacturing

Samsung's semiconductor business has proven to be a cash cow for the company. We've seen just how much it has contributed to the company's bottom line over the past few quarters. In a bid to further boost revenues from this business, Samsung today announced that it has created a new division within the semiconductor business for contract chip manufacturing.

This new division within the semiconductor business will solely be responsible for manufacturing mobile processors and other non-memory chips for clients like NVIDIA and Qualcomm, thus enabling Samsung to better compete against the likes of the Taiwan Semiconductor Manufacturing Co. Samsung's foundry business has seen considerable growth over the past few years. According to an IHS estimate, revenue from Samsung's foundry business climbed 86 percent to $4.7 billion last year.

Samsung already manufactures the Snapdragon 835 processor for Qualcomm and it will certainly want more of such lucrative manufacturing deals. The division will be headed by Kim Ki-nam who is the president of Samsung's entire chip business.

This isn't an unexpected move. Analysts have long been of the view that Samsung would eventually separate its foundry and chip divisions to improve efficiency as well as reduce any concerns that potential customers might have with regards to possible leaks to other Samsung businesses that they are in competition with.

Adnan Farooqui - Executive Editor

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First Samsung device: SGH-E900

Adnan Farooqui is a long-term writer at SamMobile. Based in Pakistan, his interests include technology, finance, Swiss watches and Formula 1. His tendency to write long posts betrays his inclination to being a man of few words.

Via Business Samsung Electronics