Samsung’s foundry business to make DDIC chips for LX Semicon

LX Semicon Co., one of South Korea’s leading chip design firms, plans to ask Samsung Electronics Co. to manufacture display driver integrated circuit (DDIC) chips – the latest indication that the two business groups are strengthening their business tie-ups.

Samsung Foundry, the Korean tech giant’s contract chipmaking business, will also likely make other next-generation chips for the LX Group unit to expand their business partnership, industry sources said on Monday.

The collaboration between Samsung and LX is expected to create synergy by strengthening the domestic chip fabrication ecosystem.

LX Semicon, formerly Silicon Works Co., is a fabless semiconductor company that specializes in designing DDICs, which control the switching and display method of LCD and OLED panels.

With the increase in panel display resolution and data transmission speed, the requirements for driver ICs are also increasing.

LX Semicon, which supplies its products to LG Display Co., BOE Technology Group and China Star Optoelectronics Technology (CSOT), has so far entrusted chipmaking to foundries such as Taiwan Semiconductor Manufacturing Co. (TSMC) and SK Hynix Inc.'s foundry unit SK Hynix System IC.

LX Semicon’s annual foundry contract is estimated at over 1 trillion won ($761 million) but the company hasn’t had any business deals with Samsung Foundry as LX previously was part of LG Group, Samsung’s crosstown rival.

In May 2021, LG Group split off its non-core units and placed them under another holding firm, LX Holdings Corp., which owns affiliates such as LX Semicon, LX International Corp. and LX Hausys Co.

LX Semicon has since strived to expand its business partners and business portfolio into display power semiconductors and automotive chips, including vehicle microcontroller units (MCUs).

JOINT WORK WITH SAMSUNG DISPLAY

Earlier this year, LX Semicon agreed with Samsung Display Co. to jointly develop next-generation OLED panel DDICs used in smartphones.

LX is now expanding its business collaboration to other Samsung Group affiliates – a move that is expected to contribute to the strengthening of the local chip manufacturing ecosystem and supply chain.

Through the expanded partnership with Samsung Group affiliates, LX can reduce its reliance on LG Display while Samsung Electronics can add another large fabless chip design firm to its client list.

Samsung Electronics is the world’s largest memory chipmaker. But in the contract chipmaking business, it is a distant second with a low double-digit market share after TSMC, which controls more than half of the global foundry market.

Samsung said it’s quickly advancing its chip process technology and can soon overtake TSMC.

In a showoff of its strengthened business tie-up with Samsung, LX Semicon plans to participate in Samsung’s annual foundry forum to be held at COEX in southern Seoul on Tuesday.

At the Samsung Foundry Forum, LX executives are slated to discuss the latest display chip trends with participants.

Write to Jeong-Soo Hwang at hjs@hankyung.com

In-Soo Nam edited this article.