Samsung Faces Chipmaking Challenges as LSI Division May Merge with Foundry Amid Yield Issues

Samsung’s chipmaking business is encountering significant challenges this year, primarily due to poor production yields impacting the company’s semiconductor output. This issue influenced Samsung’s decision to equip the entire Galaxy S25 series with Snapdragon processors, although rumors suggest that Exynos chips could make a comeback with the Galaxy S26 series.

Behind the scenes, Samsung’s LSI division, responsible for chip design, is reportedly facing serious operational difficulties. According to Korean media reports, Samsung is considering merging the LSI department with another part of its semiconductor business—most likely the Foundry division, which handles chip manufacturing.

Earlier speculation pointed to a possible merger between LSI and Samsung MX (the mobile experience division), but recent updates indicate that the favored strategy is to consolidate LSI into Foundry. An internal Samsung meeting discussed three potential options: merging LSI into MX, merging LSI into Foundry, or executing a large-scale internal restructuring of the LSI division itself. Sources close to the matter say no final decision has yet been made, though the Foundry merger appears to be the preferred choice.

Historically, both LSI and Foundry belonged to Samsung’s Device Solutions (DS) division but were separated in 2017 to avoid conflicts of interest with major Foundry clients like Nvidia and Qualcomm. This reorganization initially aimed to balance client confidentiality and business priorities, but the current challenges have prompted Samsung to revisit its internal structure.

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The potential merger or restructuring could have wide-reaching effects on Samsung’s chip development roadmap, possibly affecting the future competitiveness of Exynos processors and the company’s semiconductor business overall.

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