Key facts
- Samsung Electronics is experiencing a rebound in its foundry business due to high demand for AI chips.
- TSMC's advanced chipmaking capacity is strained, leading customers to seek alternative suppliers like Samsung.
- Samsung is in discussions with major tech companies including BYD, Google, AMD, and Tesla for contract chipmaking services.
- The company is already producing chips for Nvidia and Tesla, and has secured deals for Apple image sensors.
- Samsung's foundry business is projected to return to profit as early as the third quarter of 2026.
Samsung Electronics' long-struggling foundry business is showing signs of a rebound, driven by increasing demand for AI chips and capacity constraints at rival TSMC. The company is actively pursuing new clients and has secured significant deals with major tech players, raising hopes for a return to profitability as early as the third quarter.
Samsung's strategy involves leveraging its combined strengths in logic, memory, and packaging to gain an edge in custom AI chips. This approach is attracting global tech customers who are looking to diversify their supply chains due to TSMC's tight capacity. The company's co-CEO and chip chief, Jun Young-hyun, has met with Nvidia CEO Jensen Huang to reinforce foundry cooperation, highlighting Samsung's success in attracting big tech customers it previously struggled to engage.
Samsung is already producing Nvidia's Groq LP30 chip and is involved in the production for Nvidia's Drive AGX Thor autonomous driving platform, utilizing 4-nanometer and 8-nanometer processes. The company also has an eight-year AI chip supply deal with Tesla, valued at approximately $16.5 billion, and has secured production volume for Apple image sensors. Furthermore, Samsung's next-generation HBM4 memory chip, which uses base dies made on Samsung's 4-nanometer process, is expected to be a significant driver for the foundry business.
Industry sources indicate that Samsung is in discussions with major automakers, including BYD, for potential 2-nanometer and 4-nanometer foundry orders. These deals would expand Samsung's Chinese auto customer base beyond Nio. Additionally, Samsung has joined Anthropic's latest funding round as a strategic infrastructure partner, raising expectations that it could win production work from the AI company for logic chips.
Analysts like Kim Rok-ho of Hana Securities believe Samsung's earnings could normalize as shipments of Nvidia-bound Groq chips and HBM base dies increase, supported by a stabilized 4-nanometer process. This increased utilization is expected to help the foundry business return to profit in the second half of the year.
Samsung's technological advancements are also contributing to the recovery hopes. The company is understood to have raised the yield rate of its 2nm gate-all-around process to above 60 percent in the first quarter. While this is still below the typical threshold for full mass-production economics, it is considered sufficient for initial output and customer discussions. Samsung has also stated that utilization at its advanced process lines has reached maximum levels, with the business reportedly posting double-digit revenue growth year-on-year.