Samsung’s Chip Business Is Profitable Again – Does this Mean Smaller Manufacturers Can Compete With the Big Players?

Since we last spoke about the world’s biggest tech companies, there has been another development that could interest much smaller chip manufacturers.

Last month, we looked at CNBC’s report that investors had started paying less attention to the size of AI spending and more attention to which companies could actually make money from it.

Now, Samsung Foundry’s first profitable month in a while could be more of an indication that commercial performance is becoming more important than simply being one of the biggest names in the semiconductor market…

Why Has Samsung’s Chip Business Returned To Profit?

Samsung Foundry has recorded its first profitable month in three years, according to SamMobile. June 2026 ended a difficult period in which the company lost customers including Nvidia and Qualcomm to TSMC and reported years of heavy losses.

The business returned to profit after Samsung secured a $16.5 billion chip manufacturing contract from Tesla earlier this year. SamMobile reported that higher use of Samsung’s 4nm manufacturing process, more production of HBM base dies and better manufacturing yields all contributed to the turnaround.

Yield refers to the share of chips that pass quality control and higher yields mean more usable chips come off the production line and factories operate more efficiently. SamMobile reported that if these results continue, Samsung Foundry could also report a profitable third quarter during 2026.

The company has spent years trying to recover – analysts estimated combined operating losses for Samsung Foundry and System LSI at KRW 2.5 trillion in 2023, KRW 5.3 trillion in 2024 and KRW 6 trillion in 2025. Samsung does not publish separate financial results for its foundry business.

Samsung also manufactures HBM base dies for its memory division. Those chips are supplied to AMD, Google and Nvidia for AI hardware used across the technology sector.

Could Smaller Chip Manufacturers Benefit From This?

Samsung is one of the world’s biggest chip manufacturers, but its return to profit could also encourage investors to take a closer look at businesses outside the biggest names.

Recent interest has centred on companies spending billions of dollars to build AI infrastructure. Samsung’s latest performance shows that better production quality, efficient factories and valuable customer contracts can also turn a business around. Those are areas where much smaller manufacturers can compete without matching the spending power of the largest companies.

Competition is still intense with as Intel Foundry has become another competitor, and we know that Apple is heavily considering Intel Foundry to manufacture future chips. Samsung could also secure manufacturing contracts from AI companies such as Anthropic and Meta, although those agreements have not been confirmed.

If investors continue rewarding businesses that generate profits from AI spending, smaller manufacturers with efficient production and reliable customers could receive more interest than they have over the past few years.

What Could This Mean For The UK Chip Market?

Back home, the UK already has a semiconductor company following a very different manufacturing model. Business Matters Magazine reported that Pragmatic Semiconductor has transformed a former warehouse in County Durham into a production site that expects to manufacture billions of flexible chips each year.

Pragmatic does not compete head to head with Samsung, TSMC or Intel. Instead of producing conventional silicon chips, it manufactures ultra thin flexible integrated circuits called FlexICs. These chips can authenticate medicines and consumer products, track goods through supply chains and support medical devices. Its manufacturing process also requires much less capital than a traditional semiconductor factory and produces chips within days instead of months.

Chief executive David Moore has ambitious plans for the company. He said, “Our goal is to be one of the largest semiconductor companies in the world.” He also said Pragmatic’s “north star” is “a potential IPO.”

Moore said international customers now view the company very differently. He said, “We engage with the CEOs and chairmen of those customers. They see it as something very strategic and don’t look at us as some outlier UK based semiconductor company. They see us as a world leader in FlexIC technology. It is now all about orders and shipping.”

Business Matters Magazine reported that the company expects billions of chips to leave its Durham site this year for customers in pharmaceuticals, consumer electronics and consumer goods. Management believes Pragmatic could become the UK’s largest semiconductor manufacturer measured by production volume.

Investment has also supported that ambition with around 70% of Pragmatic’s £162 million funding round in December 2023 coming from UK investors, including the National Wealth Fund, the British Business Bank, Northern Gritstone and M&G’s Catalyst fund. The funding later reached £179 million.

Ciaran Mulligan, chief investment officer at M&G Life, said, “Our scale enables us to invest into private companies, opening up opportunities you simply don’t see in public markets. By sourcing these investments directly through our asset management teams, we can back businesses that are growing, creating jobs and driving innovation.”

Samsung’s profitable month will not just change semiconductor manufacturing, but it does show that companies improving production, winning valuable contracts and making efficient use of their factories can return to profit. That could encourage more interest in manufacturers such as Pragmatic Semiconductor as investors place more value on commercial results.