Amid intensifying competition in the global semiconductor market, South Korean tech giant Samsung Electronics plans to sell old equipment and production lines at its NAND flash memory factory in Xi 'an, China, in a bid to cut costs and boost profitability.

International electronic business news on the 7th, comprehensive media reported that Samsung Electronics, as part of its cost reduction efforts, is recently implementing large-scale cost cuts and production line adjustments in its semiconductor division (DS). The South Korean tech giant is considering selling old equipment from its semiconductor production lines in China, marking the beginning of a strategic realignment for Samsung in the global market.

The sale is expected to begin in 2025, the report said. Most of the equipment sold was 100-layer 3D NAND equipment, which was eliminated from the production line of the Xi 'an plant. Samsung Electronics has been working on converting its Xi 'an plant to a 200-layer process since last year. Normally, Samsung Electronics' old process equipment flows into the used semiconductor equipment market for recycling, and the main source of demand is China.

The problem, however, is that Samsung Electronics has yet to sell devices that are not subject to U.S. sanctions.

"We have no official position on the matter," a Samsung official said of the sale of Chinese factory equipment.

While Samsung Electronics has avoided giving an official explanation, it is widely believed that the South Korean tech giant is expected to take the most cautious steps possible to obtain VEU (Verified end User) status from the U.S. government. The VEU is a comprehensive licensing system that allows pre-approved companies to export and import designated items without the need for separate licensing procedures and expiration dates.

Some people believe that Samsung Electronics' decision is related to the increasingly fierce competition in the chip foundry market and the rise of Chinese competitors. The company reported a 1 trillion won loss in its foundry business in Q3. In order to optimize the allocation of resources, Samsung Electronics has decided to sell some old equipment and production lines to reduce unnecessary expenses and increase profitability.

Chosun Ilbo reported earlier that Samsung Electronics' semiconductor division is temporarily shutting down production lines at its foundries (contract manufacturing) to cut costs due to a huge loss in its foundry business in Q3. Samsung Electronics has shut down more than 30% of the 4nm, 5nm and 7nm wafer foundry production lines in Pyeongtaek Line 2 (P2) and Line 3 (P3), and plans to expand the shutdown range to about 50% by the end of the year. The company intends to phase out operations while it monitors customer orders.

Samsung Electronics' decision is not only an optimization of its internal cost structure, but also a response to changes in the global semiconductor supply chain. With the rise of mainland Chinese manufacturers, Samsung Electronics' strategy adjustment in the global market will have a profound impact on the entire industry.

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