Samsung Electronics is no longer just supplying Nvidia with high-bandwidth memory (HBM) for artificial intelligence (AI) accelerators. Instead, it is exploring how to secure orders for next-generation chips, including the "Drive AGX Thor" chip and the "Grok" language processing unit (LPU), for use in autonomous vehicles, through advanced foundry (semiconductor contract manufacturing) processes.

On the 8th, Samsung Electronics Executive Vice Chairman Jeon Young-hyun attended the "Korea AI Ecosystem Reception" hosted by NVIDIA at the Yeongbin Hall of the Shilla Hotel in Jung-gu, Seoul. That evening, Jeon Young-hyun held a private business meeting with NVIDIA CEO Jensen Huang. Afterwards, Vice Chairman Jeon told reporters, "Our cooperation with NVIDIA has a long history, but I believe this meeting was the most in-depth to date." He added, "We discussed short-term supply and foundry cooperation for HBM4 (6th generation) chips, and also explored medium- to long-term cooperation in joint development." Samsung Electronics emphasized that it is currently essential to ensure a sufficient supply of HBM4 and low-power memory modules SOCAMM, which will begin production this year. The company also plans to continue long-term cooperation starting next year, including HBM4E (7th generation) and HBM5 (8th generation).

Samsung's partnership with Nvidia

Former Vice Chairman Jeon Ji-hyun also stated that Samsung is establishing a deep partnership with NVIDIA in wafer foundry collaboration. He revealed, "We are exploring the use of 4nm and 8nm processes to manufacture NVIDIA's autonomous driving chips." He added, "We are also collaborating with Samsung Foundry on another NVIDIA accelerator, GROCK, and are exploring collaboration on the next generation of accelerators."

NVIDIA outsourced the production of its "GROK 3rd Generation LPU (LP30)" to Samsung Foundry, using Samsung's 4nm process. The LP30 was launched after NVIDIA acquired GROK (a fabless semiconductor design company specializing in LPUs) for $20 billion (approximately 30.6 trillion won) last December. Samsung Vice Chairman Jeon Jung-hoon stated that the production of the LP40 will also be handled by Samsung Foundry. Previously, it was widely believed that TSMC, with its advanced packaging technology, would secure the LP40 orders, but Vice Chairman Jeon Jung-hoon denied this rumor.

Meanwhile, regarding the long-term memory supply agreement (LTA) signed with Nvidia, former Vice Chairman Jeon stated, "Samsung Electronics will do everything in its power to help Nvidia succeed and become its best partner."

The Wafer foundry of Samsung

Internal sources indicate that Samsung Electronics' foundry business may achieve profitability as early as the third quarter of this year. Analysts believe the improved profitability will primarily be due to increased production of base chips and high-bandwidth memory (HBM) used in advanced 2nm processes.

Samsung's foundry business enters a growth trajectory for the first time in four years.

Industry insiders revealed on the 8th that, driven by improved yield rates and large orders, Samsung Electronics' foundry business is expected to bring forward its turnaround target from the end of this year or next year to the third quarter of this year. This marks a recovery for the division after approximately four years of losses amounting to trillions of won since 2022. It is assessed that the foundry business, previously considered Samsung Semiconductor's "Achilles' heel," has seen structural and fundamental improvements faster than expected.

Firstly, Samsung Electronics' advanced manufacturing processes have performed better than anticipated. Reports indicate that as of the first quarter of this year, the yield rate of Samsung Electronics' 2nm GAA (Gate All Around) process exceeded 60%. While this is still below the 70% yield considered the economic standard for large-scale production, industry insiders believe that this yield is sufficient to simultaneously meet initial mass production needs and attract new customers. 

In its Q1 2026 financial report released last April, Samsung Electronics stated that "the utilization rate of advanced process production lines has reached its highest level." It is understood that despite being the off-season, the company still achieved double-digit revenue growth compared to the same period last year. Furthermore, ongoing customer expansion activities since last year are expected to translate into full revenue in the second half of the year. Samsung Electronics signed a long-term supply contract worth 22.8 trillion won with Tesla last July for autonomous driving chips and plans to begin mass production of its 2nm AI5 and AI6 chips at its Taylor, Texas factory in the second half of this year. At the GTC 2026 conference last March, Nvidia CEO Jensen Huang publicly confirmed the foundry partnership with Samsung Electronics when announcing the "GROCK-3" chip, dedicated to AI inference.

Order volume is also growing rapidly. Samsung Electronics predicts that 2nm-related orders will increase by more than 130% this year compared to last year and is expanding its cooperation with several major technology companies, including Apple and Nintendo, in addition to Tesla and Nvidia. Reports also indicate that the supply of the sixth-generation HBM (HBM4) chip is completely sold out.

With the Taylor wafer fab about to begin mass production, the cost structure is expected to improve, thus reversing the fixed cost situation. The Taylor foundry, with its massive $37 billion (approximately 54 trillion won) investment, had exacerbated losses in its foundry business due to its enormous construction costs. An official familiar with Samsung Electronics explained, "It's estimated that once production officially begins in the second half of the year, depreciation costs will translate into a dilution effect on fixed costs, thus rapidly improving the profit and loss structure." The surge in demand for AI accelerators, coupled with rival TSMC's advanced process lines nearing saturation, is also a positive factor for Samsung Electronics. 

Several fabless (semiconductor design) companies are actively considering Samsung Electronics as an alternative, and there are indications that AMD is considering a dual-foundry strategy for some of its next-generation graphics processors (GPUs).

Source: Compiled from sedaily

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