Samsung Electronics to break ground on 2nd fab in Taylor within this year

A person enters Samsung Electronics' office in Seocho District, Seoul, Thursday. Yonhap

Samsung Electronics said Thursday it will break ground on the second foundry fab in Taylor, Texas, by the end of this year, citing growing global demand for advanced semiconductor manufacturing.

It also dismissed market concerns over a potential memory chip glut, saying the long lead time required to expand manufacturing capacity makes a sharp increase in supply before 2028 unlikely.

Samsung Electronics shared its outlook on semiconductor business during its second-quarter earnings call on Thursday, during which it announced 89.5 trillion won ($62 billion) in record-breaking operating profit.

The figure represents an 1,814 percent growth from a year earlier, and the revenue for the April-June period reached 171.5 trillion won, up 130 percent year-on-year. Both revenue and operating profit set new quarterly records, making Samsung Electronics the world’s most profitable company.

The chip-making Device Solutions division alone posted 127.5 trillion won in sales, up 357 percent from a year earlier, while operating profit surged more than 220-fold to 89.2 trillion won.

The record results were driven by the memory business, which capitalized on strong demand and rising selling prices for server products amid the growing adoption of agentic artificial intelligence (AI). It expanded shipments of high-bandwidth memory 4 (HBM4) and became the first in the industry to deliver next-generation HBM4E samples to major customers during the second quarter.

The company said sales from HBM4 will likely triple in the third quarter from three months earlier, and will account for over 60 percent of its total HBM revenue in the second half. It also expects server solid-state drives to account for more than 60 percent of its NAND revenue this year.

To contain earnings volatility caused by the semiconductor cycle, the company said it is expanding long-term agreements spanning more than five years, which will soon account for at least 60 percent of its total production capacity.

"As the semiconductor industry has long suffered from market ups-and-downs, expanding long-term agreements is expected to significantly improve business stability and earnings visibility," the company said.

Samsung Electronics' Taylor fab in Texas / Courtesy of Samsung Electronics

"Demand for memory is growing rapidly due to the expansion of agentic AI, while industry supply remains well below demand. Even as memory makers increase investment, it takes more than three years to build new fabs and produce wafers. Given the long lead time, it will take considerable time for capacity expansions to translate into meaningful supply growth. As a result, we do not expect a significant increase in industry supply before 2028."

Its chip-designing and foundry business also improved. It noted that the System LSI business achieved record first-half revenue by expanding sales of mobile application processors and image sensors. The foundry business also improved in its revenue due to higher demand for HBM base dies and products from North American customers.

"The expansion pace of our advanced process capacity is not keeping pace with growing demand,” the company said. “We will gradually expand our 2-nanometer capacity and are preparing to break ground on our second Taylor fab by the end of this year, targeting mass production in 2030.”

People look at Samsung Electronics' Galaxy Z8 foldable smartphone series at the company's showroom in Seocho District, Seoul, Tuesday. Yonhap

Higher memory prices, however, took a toll on the company's device businesses. The device-making Device Experience division posted 48 trillion won in revenue, down 7.2 percent from a year earlier, while swinging to an operating loss of 800 billion won from an operating profit of 4.7 trillion won a year earlier.

The company said the Mobile Experience (MX)business recorded higher revenue from a year earlier, supported by solid flagship sales of the Galaxy S26 series, but operating profit declined as rising component costs and broader industrywide cost pressures weighed on earnings. The MX and Network businesses posted a 700 billion won operating loss.

“We expect cost pressures to continue into the second half as memory prices remain elevated," the company said. "We will step up our upselling efforts by ensuring the successful launch of our new foldable lineup and Galaxy Watch Ultra, both scheduled for release in the second half.”