Samsung sells stake in ASML to raise money to invest in chips

Samsung will use the funds to expand its factories in Pyeongtaek, South Korea, and Tyler, Texas.

Samsung Electronics Co., the world's largest memory chip maker, has sold 3.55 million shares in Dutch chip equipment maker ASML Holding NV, worth an estimated 3 trillion won ($2.2 billion). Samsung Electronics' business report showed that it sold 0.9% of its shares in the second quarter, and Samsung's shareholding in ASML fell to 0.7% from 1.6% in the first quarter.

The South Korean tech party bought a 3% stake in ASML in 2012 in a strategic partnership and has since trimmed its stake to take advantage of the rise in the Dutch company's share price. Shares of Nasdaq-listed ASML rose sharply as the chip industry recovered earlier than expected. In mid-May, the stock reached a one-year high of $735.93. On Monday, the stock closed at $666.55 in the U.S. market.

ASML is the world's only manufacturer of chip-making machines, extreme ultraviolet (EUV) scanners that use photolithography technology. In the semiconductor industry, having cutting-edge equipment to produce advanced chips is crucial to the survival of chipmakers, especially others. Foundries that manufacture products, such as fabless companies and chip designers.

One of the pieces of equipment is an EUV lithography machine, which is used to create fairly complex and detailed patterns on semiconductor wafers. ASML's customers include most of the leading chip manufacturers, including foundry leader Taiwan Semiconductor Manufacturing Company (TSMC), Intel Corporation and SK Hynix.

With the subscription volume of chip investment funds reaching 3 trillion won, Samsung is expected to increase its efforts to expand its business scale. Sources previously said that when the chip market rebounds from the current downturn, chip manufacturing plants in South Korea and abroad will maintain their advantage over competitors.

The South Korean chipmaker said it will not cut chip investment even if the market is in trouble. The company has prepared 25.2 trillion won in funds for facility investment, 90% of which is for chip facilities and upgrades. Expenditure increased by 24% from 20.2 trillion won in the same period last year.

Samsung Electronics Chairman Lee Jae-yong (middle)

Visit Dutch ASML in 2022

In the second quarter, Samsung's comprehensive operating profit was 670 billion won, its worst performance in 14 years. Sales fell 22.3% year-on-year to 60 trillion won. Chip business operations increased by 4.36 trillion won in the second quarter.

Samsung's second-quarter chip recovery highlights the severity of the semiconductor industry's downturn, but most leading chipmakers are optimistic the market will rebound in the second half of this year. Samsung echoed this sentiment, stating that the memory market may initially recover in the fourth quarter of the first quarter.

For the first time, the foundry industry is likely to recover significantly this quarter, industry officials said. Samsung is currently spending heavily to acquire its foundry factories in Pyeongtaek, South Korea, and its factory in Tyler, Texas.

Analysts say Samsung's recent sale of its stake in ASML will not have a negative impact on the Dutch company's relationship. As ASML's second-largest customer, Samsung is committed to maintaining a short-term partnership. Samsung Chairman Lee Jae-yong stops by the company every time he visits Europe. In order to raise funds for chip investment, Samsung also sold a 1.6% stake in Chinese electric vehicle and power battery manufacturer BYD worth US$1.3 billion in 2021. Samsung also received a record 2.185 billion won from its subsidiaries, a 158-fold increase from 137.8 billion won in the same period last year. Samsung said Samsung Overseas will be used to expand chip factories in South Korea and overseas.

At the end of 2022, Samsung held combined cash and cash equivalents of 115.23 trillion won. As of the end of 2022, the company's independent cash assets were 3.92 trillion won.

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