August 1, 2025

Samsung Electronics Struggles Amidst Texas Expansion

News Summary

Samsung Electronics is facing significant challenges as it prepares to establish a major chip manufacturing plant in Texas. A recent report highlights a 55% drop in profits, primarily due to U.S. export controls and decreased demand. Although the tech giant has secured a major deal with Tesla worth $16.5 billion, delays in the plant’s timeline and struggles to align production capabilities with market needs add to the uncertainty. Despite these difficulties, Samsung remains hopeful about future collaborations and improving operations, all eyes are now on Texas for the next steps.

Texas – Samsung Electronics, the world’s leading maker of smartphones and memory chips, recently reported a dramatic 55% profit drop in the second quarter as it faces a challenging environment for its semiconductor manufacturing operations. The company’s operating profit plummeted to $3.4 billion, down from $7.5 billion in the same period last year. This decline is especially pronounced in its chip division, which saw profits fall by 93.8% to just $286.5 million, compared to $4.6 billion in the previous year.

In addition to profit losses, Samsung’s chip revenues experienced a slight decrease, dipping from $20.5 billion to $20 billion. The company attributed these setbacks to various factors, including U.S. export controls that have constrained its operations, a lack of demand, and reduced production capabilities at its foundries. The company is now tackling additional hurdles as it prepares for operations at its new plant in Texas, which has faced substantial delays.

Samsung recently secured a $16.5 billion deal with Tesla to supply chips for artificial intelligence applications in vehicles and data centers, marking a significant step forward for the company as it works to ramp up production at its new facility in Texas. However, the commencement of operations at the Taylor semiconductor plant has been postponed from an initial target of 2024 to 2026. This delay is linked to difficulties in securing confirmed customer orders and ongoing disruptions within the supply chain.

Reports indicate that Samsung has struggled to meet the industry’s evolving technological demands, shifting from the anticipated 4nm chip production to the more advanced 2nm technology. Consequently, Samsung has seen its share of the global foundry market shrink to 7.7%, while its chief competitor, the Taiwan Semiconductor Manufacturing Company (TSMC), commands a dominant 68% of the market.

The Taylor facility, covering 1,000 acres, was declared the largest foreign direct investment in Texas, with the state’s Governor Greg Abbott emphasizing its significance. While initial investments for the site were estimated at $17 billion, Samsung has since escalated its planned investment to $44 billion in hopes of enhancing the plant’s capabilities. Construction has been underway since 2022, but attracting large-scale clients remains essential for its profitability.

The Biden administration has provided $4.75 billion in funding for the Texas semiconductor facilities under the CHIPS Act to encourage domestic chip manufacturing. Yet, Samsung has encountered difficulties, reportedly having “virtually no customers” until the recent Tesla agreement. This partnership is seen as a critical development for Samsung’s operational outlook, given the strategic importance of the facility for producing Tesla’s next-generation AI6 chips.

Company shares fell by 1.65% on the Korean Stock Exchange after the release of its financial report, indicating market concern over these developments. Furthermore, Samsung faces looming geopolitical uncertainties, particularly arising from the ongoing U.S.-China technology rivalry. Potential semiconductor tariffs on imports from South Korea could also pose additional risks to Samsung and the semiconductor sector overall. A proposed 15% tariff on these imports announced by former President Trump has raised alarms, especially for Samsung as a major exporter.

As Samsung navigates these significant challenges, it remains committed to increasing collaboration with other clients in the U.S. to maximize the utilization of its Texas facility and improve its financial performance within an increasingly competitive and complex market landscape.

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Author: STAFF HERE GEORGETOWN

The GEORGETOWN STAFF WRITER represents the experienced team at HEREgeorgetown.com, your go-to source for actionable local news and information in Georgetown, Williamson County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Red Poppy Festival, Georgetown Swirl, and Christmas Stroll. Our coverage extends to key organizations like the Georgetown Chamber of Commerce and the Downtown Georgetown Association, plus leading businesses in manufacturing and tourism that power the local economy such as local wineries and historic downtown shops. As part of the broader HERE network, including HEREaustin.com, HEREcollegestation.com, HEREdallas.com, HEREhouston.com, HEREgeorgetown.com, and HEREsanantonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.