Samsung Electronics Gains Ground as Major Tech Giants Explore Foundry Partnership Options

Key Takeaways

Table of Contents

Major technology firms are exploring partnerships with Samsung Electronics’ foundry division as Taiwan Semiconductor Manufacturing Company confronts capacity limitations.
Alphabet’s Google is negotiating with Samsung for potential production of future Axion processors and Tensor Processing Units, with deployment anticipated around 2028.
Chinese electric vehicle manufacturer BYD is exploring Samsung’s capabilities for manufacturing next-generation self-driving technology chips.
Advanced Micro Devices is considering Samsung for production of select future central processing units.
The global landscape for cutting-edge semiconductor manufacturing remains dominated by three players: TSMC, Samsung, and Intel.

As artificial intelligence infrastructure requirements continue to surge, Taiwan Semiconductor Manufacturing Company’s production capabilities for advanced nodes are reaching their limits — creating an opportunity for Samsung Electronics to capture new business.

According to a Wednesday report from Nikkei Asia, Samsung Electronics has experienced a notable uptick in foundry service inquiries from prominent international clients, including Alphabet’s Google, Advanced Micro Devices, BYD, and Tesla. The information comes from six sources familiar with the discussions.

Shares of Samsung Electronics advanced approximately 1% following the disclosure.

Samsung Electronics Co., Ltd., SMSD.L

TSMC’s production schedule is largely allocated to its established client base — which includes Nvidia, Apple, AMD, Broadcom, Marvell, and MediaTek — resulting in minimal availability for additional orders in the immediate future. While TSMC has announced expansion initiatives, semiconductor fabrication facilities require substantial capital investment and multi-year construction timelines. This constraint is prompting certain companies to evaluate alternative manufacturing partners.

Potential Projects Under Discussion With Samsung

Google is engaged in preliminary discussions with Samsung regarding the fabrication of its upcoming Axion processor generation, projected for release approximately in 2028. The technology giant is also evaluating Samsung’s foundry services for manufacturing a portion of its Tensor Processing Units, the specialized silicon it employs for artificial intelligence computational tasks, similarly targeting a 2028 timeframe.

AMD is exploring the possibility of having Samsung produce certain future central processing unit designs. BYD, the leading Chinese electric vehicle producer, is in dialogue with Samsung about fabrication of its forthcoming autonomous vehicle chip platform. Tesla has also been identified in the report as among the companies that have initiated inquiries.

It’s important to note these represent preliminary negotiations rather than finalized manufacturing agreements.

The Elite Trio of Advanced Semiconductor Manufacturing

TSMC, Samsung, and Intel represent the exclusive group of companies possessing the technological capability and scale to manufacture state-of-the-art semiconductors in volume production. This limited competitive field provides all three significant negotiating power in a market characterized by continuously expanding AI-driven demand.

Intel has been actively pursuing external foundry customers for its advanced manufacturing capabilities, although the company’s primary focus remains producing chips for its proprietary product lines.

TSMC shares (TSM) declined approximately 3.5% during Wednesday’s trading session. AMD (AMD) retreated roughly 7.3%, while Intel (INTC) fell 8.45%. GOOGL recorded a modest gain of 1.06%.

Samsung’s foundry division has encountered production yield and operational execution difficulties in recent years, factors that originally drove some clients to prefer TSMC. Whether these emerging inquiries materialize into confirmed purchase orders will hinge on Samsung’s capacity to meet the stringent quality standards and production volumes that customers require.

According to TipRanks, TSMC maintains a Strong Buy consensus rating with analysts setting an average price target of $465, suggesting approximately 9% appreciation potential from present levels. TSMC shares have gained roughly 40.7% year-to-date.

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