TSMC faces capacity shortage, while Samsung's foundry orders surge: Google, AMD, and Tesla all seek cooperation.

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The explosive growth in AI infrastructure demand is reshaping the global landscape of advanced chip foundry.

On June 17th, according to Nikkei Asia, six sources revealed that global technology and automotive giants such as Google, AMD, and Tesla are accelerating their requests for advanced process foundry services from Samsung Electronics, mainly because TSMC's advanced capacity continues to tighten. It is becoming increasingly difficult for new customers and small batch orders to get scheduled. If this trend continues, it will be the most significant structural breakthrough for Samsung's foundry business in recent years.

According to the report, this means the global advanced chip foundry landscape is rapidly diversifying from TSMC to a multi-supplier supply chain. Multiple leading chip designers are adopting a "dual supplier" strategy, distributing orders between TSMC and Samsung to hedge against capacity risks and uncertainties.

Notably, Samsung's foundry and system LSI business combined revenue reached 6.9 trillion KRW (approximately $4.6 billion) in the first quarter, up about 15% year-on-year. The surge in new orders is expected to further drive a rebound in this business.

TSMC capacity tops out, clients forced to look elsewhere

The tight capacity in TSMC's advanced process is the core driver for this wave of order transfers.

TSMC, Samsung, and Intel are the only three companies worldwide that can provide large-scale advanced chip manufacturing services, and TSMC has already locked most of its advanced node capacity for major clients such as Nvidia, Apple, AMD, Broadcom, Marvell, and MediaTek.

According to the report, an executive at an automotive chip design company said:

"TSMC prioritizes advanced node production not only because this strengthens its technological leadership and long-term strategy but also because these nodes are more profitable and continued to be in short supply."

He added that Samsung's yield still lags behind TSMC, but the availability of capacity is increasingly appealing to clients.

Google, AMD: Concrete negotiations underway

Multiple specific cooperation negotiations are ongoing, involving clients from technology, automotive, and semiconductor design sectors.

According to the report, two sources revealed that Google is in contact with Samsung about manufacturing its next-generation Axion processor, expected to launch around 2028. Meanwhile, Google may outsource some Tensor Processing Units (TPUs) for AI computing to Samsung as early as 2028.

As for AMD, a source revealed that the company is negotiating with Samsung, planning to commission Samsung to manufacture some future CPU products as early as 2028. AMD is currently a major client of TSMC, and this move marks a significant adjustment in its supply chain strategy.

Tesla and Nvidia: Samsung is already a real-world partner

Unlike the clients still in negotiation, Tesla and Nvidia have already established substantive partnerships with Samsung.

Tesla is currently working with both Samsung and TSMC to manufacture multiple products, including the AI5 chips used in vehicles and robots.

Reportedly, the upcoming next-generation AI6 chip will be exclusively produced by Samsung at its Texas factory. Tesla founder Elon Musk has also announced cooperation with Intel for the future Texas "Super Fab" project, aiming to bring more key chip production back to the US.

For Nvidia, its Groq language processing unit (LPU) is currently manufactured by Samsung, but Nvidia has not yet decided whether to continue with Samsung or use other foundries for the next generation of these chips. The vast majority of Nvidia’s chips are still exclusively manufactured by TSMC.

Samsung Foundry: Key window from trough to rebound

This wave of orders is highly significant for Samsung's foundry business. Previously, Samsung's foundry mainly served its own consumer electronics and home appliances, with limited progress in expanding external clients in recent years, and its profitability fell in the first quarter due to seasonal factors.

Samsung’s foundry and system LSI business combined revenue was 6.9 trillion KRW in the first quarter, up about 15% from 6 trillion KRW a year earlier, but Samsung did not disclose separate earnings data for the two business units.

Meanwhile, Samsung is benefiting from surging demand for memory chips driven by the AI investment boom, with shipments of high-bandwidth memory (HBM), DRAM, and NAND flash all growing exponentially.

If the foundry business can simultaneously take advanced process orders from clients like Google and AMD, Samsung is likely to consolidate both memory and logic chip positions in the AI value chain, further strengthening its strategic role in the global semiconductor supply chain.

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