Key facts
- Samsung Electronics has increased prices for advanced contract chipmaking services by up to 15% for new orders.
- Demand for AI chips has tightened capacity, leading customers to seek alternatives to TSMC.
- Chinese customers are experiencing the steepest price increases.
- Samsung's foundry business has been a loss-maker since 2022.
- Samsung's SF4 production line is running at full capacity.
- Samsung has secured deals with Tesla, Apple, Broadcom, and Nvidia, and is in talks with Google.
Samsung Electronics has increased prices for some advanced contract chipmaking services by up to 15% for new orders, according to sources familiar with the matter. This move comes as demand for AI chips tightens capacity in the foundry market, a sector long dominated by Taiwan Semiconductor Manufacturing Co (TSMC).
Demand from Chinese customers has been particularly strong, but Samsung's ability to meet all orders is constrained by its commitments to U.S. clients and the need to reserve capacity for its own chip production. Chinese firms are reportedly accepting the steepest price increases, highlighting their increased reliance on overseas foundries due to U.S. export restrictions on advanced chipmaking equipment.
The price hikes signal a potential turnaround for Samsung's foundry business, which has reportedly been loss-making since 2022. The division has struggled to compete with TSMC, despite Samsung's overall record profits driven by high prices for memory chips used in AI systems. Prices for Samsung's 4-nanometre SF4 process chips saw increases of 10% to 15% for U.S. and Chinese customers, and 5% to 10% for Taiwanese clients. Its 5-nanometre SF5 process chips rose 10% to 15%, and older 8-nanometre technology saw an increase of nearly 10%.
With TSMC's leading-edge capacity largely booked, Samsung has gained leverage to raise prices. Analysts suggest that if Samsung continues to increase prices, its foundry business could become profitable as early as next year. Samsung's SF4 production line in Pyeongtaek, South Korea, has been operating at full capacity since late last year, producing logic chips for clients like Qualcomm and base dies for Samsung's own high-bandwidth memory (HBM) chips.
Samsung has recently secured chip manufacturing deals with major technology firms including Tesla, Apple, and Broadcom, and Nvidia's CEO has indicated Samsung will produce its new AI inference processor. Google is also reportedly in discussions with Samsung for SF4 chip manufacturing.