The new division will make mobile processors and other non-memory chips for clients such as Qualcomm and Nvidia, competing with TSMC.

It will continue to be overseen by Samsung's president Kim Ki-nam.

Analysts had thought that the firm would eventually split apart its foundry and system chip operations for ages. It will make them both more efficient and ease concerns from customers about potential leaks to parts of Samsung that compete with them.

Although revenue from the foundry business remains a small portion of Samsung's overall sales, it has seen sharp growth. Research firm IHS estimates Samsung's foundry revenue rose 86 percent to $4.7 billion in 2016.