As demand for artificial intelligence (AI) semiconductors surges and Taiwan's TSMC, the world's largest foundry, reaches its production capacity, Samsung Electronics' foundry business is gaining renewed attention as an alternative manufacturing source. Electric vehicle manufacturer BYD and Google are reportedly considering outsourcing semiconductor production to Samsung.
Nikkei Asia, a publication affiliated with the Nihon Keizai Shimbun, reported on June 17 that BYD and Google are exploring the possibility of having Samsung produce semiconductors for them. Citing six sources familiar with the matter, the report noted a significant increase in inquiries to Samsung's foundry from both existing and potential customers.
BYD is in discussions with Samsung about producing next-generation autonomous driving semiconductors. Google is also considering Samsung as a contract manufacturer for its next-generation central processing units (CPUs) expected to be deployed around 2028. Additionally, Google is reportedly looking into outsourcing some of its custom-designed tensor processing units (TPUs) to Samsung as early as 2028. All parties involved have declined to confirm these discussions.
The primary reason for the renewed interest in Samsung's foundry is TSMC's supply shortages. With the rapid increase in demand for AI semiconductors, major clients like Nvidia, AMD, and Qualcomm are placing their orders primarily with TSMC. Currently, only TSMC, Samsung, and Intel have the capacity to produce advanced semiconductors on a large scale.
An executive from a Chinese automotive semiconductor design firm pointed out that while Samsung lags behind TSMC in yield rates, it remains an attractive option due to its supply capacity. Although TSMC leads in technology, Samsung is becoming a realistic alternative for clients struggling to secure production schedules.
Chinese semiconductor design companies are also diversifying their orders. Many are already splitting their orders between Samsung and TSMC. Another industry source explained that TSMC's advanced process production capacity has nearly reached its limits, making it difficult for smaller Chinese firms to place new orders. Consequently, some companies are reaching out to Samsung with an eye toward future production outsourcing.
For U.S. companies, Samsung could also serve as a way to mitigate geopolitical risks. An executive in the semiconductor industry noted, "Geopolitical factors are also driving U.S. companies to diversify their contract manufacturing sources." As clients seek to spread their production locations, Samsung is emerging as a viable option.
Some clients are already expanding their dealings with Samsung. Tesla is producing its AI semiconductor 'AI5' chips at both Samsung and TSMC, while the next-generation 'AI6' chips are set to be manufactured at Samsung's facility in Texas. Major TSMC clients like AMD and Nvidia are reportedly in discussions with Samsung for some projects due to supply shortages. Qualcomm is also utilizing both TSMC and Samsung for its production needs.
This trend could provide Samsung with an opportunity to revitalize its previously sluggish foundry business. While Samsung has established global competitiveness in memory semiconductors, it has struggled to keep pace with TSMC in terms of advanced process yields and securing large clients in the foundry sector. However, as the AI semiconductor supply crisis continues, clients are increasingly looking to reduce their reliance on TSMC. The key will be how effectively Samsung can improve yield and stability during mass production. If this leads to significant orders, Samsung's foundry could experience a turning point after a long period of stagnation.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.