Capacity Crunch Reshapes Foundry Pricing
<cite index="3-8">Samsung Electronics has raised prices for some advanced contract chipmaking services by up to 15% for new orders, as demand for artificial intelligence (AI) chips tightens capacity in a business long dominated by Taiwan Semiconductor Manufacturing Company (TSMC).</cite> The increases, reported by Reuters citing two people familiar with the matter who spoke on condition of anonymity, apply to new wafer orders across several leading-edge process nodes.
<cite index="3-2">Prices for SF4 customers in China and the United States were increased 10% to 15% from the previous month, while customers in Taiwan saw increases of 5% to 10%.</cite> <cite index="3-3">Prices for wafers produced by Samsung's 5-nanometre SF5 process rose by 10% to 15%, while those for its older 8-nanometre technology rose by nearly 10%.</cite> <cite index="3-4">Samsung declined to comment, as the company does not provide details on operational matters.</cite>
TSMC Constraint as Structural Catalyst
<cite index="5-7">Accelerating demand for AI semiconductors has absorbed much of TSMC's leading-edge manufacturing capacity, creating opportunities for alternative suppliers.</cite> <cite index="11-1">TSMC's Arizona manufacturing capacity has been sold out through 2027 since early 2025, underscoring the massive demand for the company's output.</cite> <cite index="10-9">Demand at leading nodes is expected to exceed capacity by 25–30% in 2026, and the situation is not projected to ease until at least 2027.</cite>
<cite index="5-10,5-11">With TSMC capacity increasingly constrained, Samsung has gained greater flexibility to increase its own prices. "As TSMC faces tight capacity and raises prices, customers are shifting to rivals such as Samsung and Intel, prompting Samsung to raise its prices as well," said Lee Min-hee, a Seoul-based analyst at BNK Investment & Securities.</cite>
<cite index="7-3">TSMC's market leader position notified customers of 5% to 10% increases across all sub-5nm nodes starting in January, with some services reportedly rising around 25% in 2027.</cite> <cite index="7-4">Samsung is raising prices beneath that umbrella and still landing below where TSMC's quotes are headed.</cite>
Samsung's SF4 Line and Customer Mix
<cite index="2-5,2-6">Samsung's SF4 production line at its Pyeongtaek plant in South Korea has operated at full capacity since late 2025. The line produces logic chips for customers including Qualcomm and base dies used in Samsung's own multilayer high-bandwidth memory (HBM) chips.</cite>
<cite index="3-9">Demand from Chinese customers has been particularly strong, but Samsung has been unable to meet all orders because it must serve U.S. customers and reserve part of its capacity to support its own chip production.</cite> <cite index="5-6">U.S. restrictions on exports of advanced semiconductor manufacturing equipment to China have increased the dependence of Chinese chip companies on overseas foundries.</cite>
<cite index="2-8">Samsung announced an AI chip manufacturing deal with Broadcom in July 2026, while Nvidia Chief Executive Jensen Huang said in March 2026 that Samsung would manufacture Nvidia's new AI inference processor.</cite> <cite index="2-9">Google is also in discussions with Samsung about manufacturing chips using the company's SF4 4nm process, according to Reuters.</cite>
Revenue Mix and Profitability Outlook
<cite index="5-8,5-9">Samsung expects advanced manufacturing processes to generate more than half of its foundry revenue this year. AI and high-performance computing (HPC) applications are projected to represent more than 30% of the total, compared with between 15% and 20% in late 2025.</cite>
<cite index="1-4">TrendForce estimated that Samsung Foundry generated slightly more than $3.2 billion in revenue in the first quarter of 2026, giving it 6.5% of the global market, compared with 72% for TSMC.</cite>
<cite index="8-2">The pricing shift marks a reversal for a foundry unit that has reportedly lost money since 2022.</cite> <cite index="9-3">In July, Samsung told investors the division was on track to return to profitability, pointing to improved fab utilization rates, yield gains, and stronger average selling prices as the main drivers.</cite> <cite index="8-7">Lee Min-hee, an analyst at BNK Investment & Securities, said further increases could make the business profitable as early as next year.</cite>
<cite index="1-8">Research firm TrendForce expects global foundry revenue to increase 24.8% year over year to approximately $218.8 billion in 2026, with AI graphics processing units (GPUs) and custom processors driving demand for 5nm, 4nm, and more advanced processes.</cite>