As demand for artificial intelligence (AI) chips surges and TSMC's advanced-node capacity is quickly being exhausted, Samsung Electronics' foundry has moved to raise prices. Analysts say Samsung Electronics, which had struggled to improve profitability after falling behind TSMC in competition, is beginning to secure pricing power amid the supply shortage.
On the 19th, Reuters reported that Samsung Electronics(005930) raised some advanced foundry process prices by up to 15% for new orders placed last month. Chinese customers, where demand is particularly strong, are said to have accepted the largest increases.
Specifically, it raised the price of the 4-nanometer process "SF4." Prices for Chinese and U.S. customers were raised 10%–15% from the previous month, and for Taiwanese customers 5%–10%.
The 5-nanometer "SF5" process also rose 10%–15%, and the 8-nanometer process rose about 10%.
Samsung Electronics did not offer a separate position on whether it raised prices, citing a policy of not disclosing matters related to individual business operations.
According to market research firm Counterpoint Research, Samsung Electronics' share of global foundry revenue in the first quarter this year was 7%, far behind TSMC, which held more than 70%.
Lee Min-hee, an analyst at BNK Investment & Securities, told Reuters, "As TSMC raises prices amid capacity shortages, customers are shifting to competitors such as Samsung Electronics and Intel," adding, "Samsung Electronics is also raising prices on the back of this."
Lee added, "If price hikes continue, the Samsung Electronics foundry business could swing to profit as early as next year, earlier than previously expected."
The SF4 production line operating at Samsung Electronics' Pyeongtaek business sites in Korea has reportedly been running at full capacity since the end of last year. The line produces not only logic chips for customers such as Qualcomm, but also base dies used in Samsung Electronics' high bandwidth memory (HBM).
Samsung Electronics has been repeatedly signaling the potential for improved profitability in its foundry business this year. Last month, it projected the foundry business would soon return to profit, helped by higher factory utilization, Production yield improvements, and price increases. It also expected the share of advanced nodes in this year's foundry revenue to rise to more than half.
Orders are also continuing. Samsung Electronics secured semiconductor production contracts from Tesla and Apple last year, and announced an AI chip production contract with Broadcom last month. Samsung Electronics' 4-nanometer process is also expected to be used to produce Nvidia's new AI inference processor.
Reuters also reported that Google is in talks with Samsung Electronics to produce semiconductors using the SF4 process.