Samsung hikes chipmaking prices 15% as AI demand tightens capacity

Samsung Electronics raised prices for advanced contract chipmaking services by up to 15 percent on new orders, two people familiar with the matter said, as AI chip demand tightens capacity in a market long dominated by TSMC.

"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," Lee Min-hee, a Seoul-based analyst at BNK Investment & Securities, said. "If Samsung raises prices from here, its foundry business could potentially become profitable as early as next year, earlier than previously expected."

Samsung raised prices in July for chips made using its 4-nanometer SF4 process. Customers in China and the U.S. saw increases of 10 percent to 15 percent from the previous month, while customers in Taiwan saw rises of 5 percent to 10 percent. Prices for its 5-nanometer SF5 process rose 10 percent to 15 percent, and its older 8-nanometer technology increased by nearly 10 percent.

The price hikes mark a turning point for Samsung's foundry unit, which industry estimates suggest has been loss-making since 2022. Samsung said in July it expects the division to return to profit in the near future, helped by higher factory utilization, better yields and firmer pricing.

TSMC's capacity crunch hands Samsung pricing power

Samsung produced 7 percent of global foundry revenue in the first quarter of 2026, compared with more than 70 percent for TSMC, according to Counterpoint. But AI chip demand has booked up much of TSMC's leading-edge capacity, giving Samsung room to absorb spillover orders and raise prices.

Samsung's SF4 production line at its Pyeongtaek plant in South Korea has been running at full capacity since late last year, said a person familiar with the company's operations. The line produces logic chips for customers including Qualcomm, as well as base dies used in Samsung's own multi-layer high-bandwidth memory (HBM) chips.

Chinese customers have been particularly strong demand drivers, but Samsung has been unable to meet all orders because it must serve U.S. customers and reserve part of its capacity for its own chip production. U.S. restrictions on exports of advanced chipmaking equipment to China have increased local firms' reliance on overseas foundries, making Chinese customers among those accepting the steepest price increases.

Samsung expects advanced processes to account for more than half of foundry revenue this year, while AI and high-performance computing applications would make up more than 30 percent, up from 15 percent to 20 percent in late 2025.

Customer wins accelerate as yields improve

Improvements in production yields have helped Samsung win additional customers. Tesla and Apple announced chip manufacturing agreements with Samsung last year, while Samsung disclosed an AI semiconductor production deal with Broadcom in July. Nvidia CEO Jensen Huang said in March that Samsung would manufacture the company's new AI inference processor. Google is also in talks with Samsung to manufacture chips using the SF4 process, according to one of the sources.

Samsung expects foundry revenue in the second half to grow by more than double-digit percentage points from a year earlier, helped by stronger sales to major U.S. and Chinese customers and demand for HBM base dies.

The pricing power shift comes as Samsung's broader semiconductor business posts record results. Its Device Solutions division generated 209.2 trillion won ($147 billion) in revenue in the first half of 2026, accounting for 68.5 percent of total company revenue of 305.4 trillion won ($214 billion). Operating profit reached 142.9 trillion won ($100 billion), representing 97.4 percent of the group's total.

Samsung's HBM4 yield has reached 80 percent, up from less than 60 percent when mass production began in February, according to market sources. The company has set a target of raising its HBM market share to about 38 percent by year-end.

The foundry price increases and process roadmap adjustments reflect a deeper shift in the competitive logic of the industry. Samsung has pushed its 1.4-nanometer mass production timeline from 2027 to 2029, choosing to focus on maturing its 2-nanometer platform. TSMC, meanwhile, has N2 in mass production and its A16 node scheduled for the second half of 2026, with backside power delivery delivering 8 percent to 10 percent higher speed at the same power compared with N2P.

For investors, the question is whether Samsung's short-term pricing power translates into durable profitability. The foundry unit's path to the black depends on sustaining full utilization and converting its 2-nanometer yield improvements into customer commitments beyond the current AI-driven order surge.

This article is for informational purposes only and does not constitute investment advice.