Key Takeaways
- Samsung Electronics shares plummeted 7% to ā©249,750 during Wednesday’s session amid widespread semiconductor sector selling across Asian exchanges
- South Korea’s KOSPI index plunged over 6%, activating the Korea Exchange’s circuit breaker to pause automated trading temporarily
- Escalating geopolitical tensions between the U.S. and Iran drove crude prices upward, increasing bond yields and weighing on global technology equities
- The company has increased pricing for cutting-edge foundry services by as much as 15%, particularly affecting its SF4 and SF5 manufacturing nodes
- The foundry division, which has posted losses since 2022, may achieve profitability by next year if current pricing conditions persist
Shares of Samsung Electronics tumbled 7% to ā©249,750 during Wednesday trading, swept up in a massive semiconductor sector downturn that dragged South Korea’s KOSPI benchmark down more than 6%.
Samsung Electronics Co., Ltd., SMSD.L
The Korean exchange implemented its sell-side circuit breaker during the trading day, halting program trades temporarily as institutional investors accelerated their selling activity. This followed a 1.55% KOSPI decline in the previous session, ending a six-session rally after institutions offloaded nearly 785 billion won worth of Korean stocks.
The decline mirrored significant overnight losses among U.S. memory chip manufacturers, as market participants retreated from technology sector positions globally. Competitor SK Hynix similarly faced intense institutional selling pressure during the session.
The catalyst was heightened tensions between the United States and Iran. An ongoing confrontation in the Strait of Hormuz drove oil prices upward, rekindling concerns about inflation and pushing U.S. Treasury yields higher. This dynamic typically pressures richly valued technology stocks.
Compounding the pressure, news surfaced suggesting the U.S. requested South Korea prioritize memory chip production facilities in America as the cornerstone of a proposed $350 billion investment initiative. While Seoul refuted the specific details, the reports introduced additional uncertainty for South Korean semiconductor manufacturers.
Advanced Chip Pricing Increases Mark Strategic Shift
In separate developments, Reuters disclosed that Samsung has implemented price increases reaching 15% for certain advanced contract manufacturing services on newly placed orders, according to two sources with direct knowledge of the situation.
Pricing for semiconductors manufactured using its 4-nanometer SF4 technology increased between 10% and 15% for clients based in China and the United States, while Taiwanese customers experienced hikes ranging from 5% to 10%. Production using its 5-nanometer SF5 process also saw increases of 10% to 15%, and its more mature 8-nanometer technology experienced price adjustments approaching 10%.
Chinese clients have demonstrated particular willingness to accept the higher pricing. American export restrictions on sophisticated chipmaking equipment have forced Chinese semiconductor companies to depend more extensively on international foundries like Samsung.
Samsung generated only 7% of worldwide foundry revenue during Q1 2026, contrasting sharply with TSMC’s commanding 70%-plus market share. However, with TSMC’s cutting-edge manufacturing capacity heavily allocated to AI chip production, Samsung has secured pricing leverage previously elusive in this business segment.
“As TSMC faces tight capacity and raises prices, customers are shifting to rivals such as Samsung and Intel, prompting Samsung to raise its prices as well,” said Lee Min-hee, analyst at BNK Investment & Securities.
Loss-Making Foundry Unit Eyes Profitability
Samsung’s contract manufacturing operations have generated losses continuously since 2022. However, analyst Lee indicated that sustained pricing levels could enable the division to achieve profitability by next year, earlier than previously anticipated.
Samsung’s SF4 production line at its Pyeongtaek manufacturing facility has operated at maximum capacity since the end of last year. This line serves major clients including Qualcomm and manufactures base chips for Samsung’s proprietary HBM products.
Last July, Samsung announced a semiconductor manufacturing agreement with Broadcom. Nvidia CEO Jensen Huang revealed in March that Samsung would produce its next-generation AI inference chip. Tesla and Apple both disclosed chipmaking partnerships with Samsung during the previous year.
According to a source familiar with the pricing adjustments, Google is currently negotiating with Samsung regarding chip production utilizing the SF4 manufacturing process.
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