Demand for AI is crowding out TSMC's production capacity, and Samsung chip foundry took advantage of the opportunity to increase prices by up to 15%

The Zhitong Finance App learned that according to two people familiar with the matter, Samsung Electronics has raised the price of new orders for some advanced chip foundry services by up to 15%. The background of this price adjustment is a surge in demand for AI chips, TSMC's advanced production capacity is becoming saturated, and some customers have begun to switch orders to Samsung. As a result, this company, which has been in a position to catch up in the OEM field for a long time, has gained room for price increases.

AI demand crowds out TSMC's production capacity, Samsung ushered in a “window” for bargaining

This price increase marks a major turning point in Samsung's foundry business. Industry estimates show that the business has been in the red since 2022. Despite soaring memory chip prices driving Samsung to record profits, its foundry division is still working to close the gap with TSMC.

According to sources, Samsung raised the price of chips manufactured using its 4 nm process (SF4) in July. One of the sources revealed that the price of SF4 for Chinese and US customers has increased by 10% to 15% compared to the previous month, the price of wafers produced using the 5 nm process (SF5) has increased by 10% to 15%, while the price of older 8 nm technology products has also increased by nearly 10%.

Samsung did not comment as the company did not provide details on operational matters.

According to data from research institute Counterpoint, in the first quarter of 2026, Samsung accounted for 7% of global foundry revenue, while TSMC's share exceeded 70%.

However, demand for AI chips has taken up the vast majority of TSMC's advanced process production capacity. Samsung expects advanced manufacturing processes to account for more than half of its foundry revenue this year, while AI and high-performance computing applications will account for more than 30%, up from 15% to 20% at the end of 2025.

As TSMC's production capacity tightens, Samsung has gained more room to bargain.

Lee Min-hee, a Seoul-based analyst at BNK Investment Securities, said: “As TSMC faces tight production capacity and increases prices, customers are turning to competitors such as Samsung and Intel, which also prompted Samsung to raise prices simultaneously.” He also pointed out that if Samsung starts to raise prices, its OEM business may be profitable as early as next year, earlier than previously anticipated.

Samsung's SF4 production line is at full capacity, Google is reportedly negotiating cooperation

A person familiar with Samsung's operations said that Samsung's SF4 production line at its Pyeongtaek plant in South Korea has been operating at full capacity since the end of last year. The production line produces logic chips for customers such as Qualcomm, and also produces basic chips used in Samsung's own multi-layer high-bandwidth memory chips (HBM).

Samsung said in July that thanks to increased factory utilization, higher production yield, and stronger prices, it is expected that the foundry department will resume profits in the near future. The company also said at the time that growing sales from major customers in the US and China, combined with demand for HBM's basic chips, should help drive a double-digit year-on-year increase in labor revenue in the second half of the year.

Increased production yield also helped Samsung win customers. Tesla and Apple reached a chip manufacturing agreement with Samsung last year. Samsung also announced an AI chip production agreement with Broadcom in July, and Nvidia CEO Hwang In-hoon said in March that Samsung would manufacture a new AI inference processor for it.

People familiar with the matter revealed that Google is also in talks with Samsung and plans to use the SF4 process to produce chips. Google did not respond to requests for comment.