Why Samsung has raised chipmaking costs by up to 15%
What's the story
Samsung Electronics has raised the prices for some of its advanced contract chipmaking services by as much as 15%. The move comes in response to a surge in demand for AI chips, which is straining capacity in an industry long dominated by Taiwan Semiconductor Manufacturing Company (TSMC). The price hike is applicable for new orders and has been particularly driven by strong demand from Chinese customers.
Business shift
Foundry business operating at a loss
The price hikes mark a major change for the company's foundry business, which has been operating at a loss since 2022. The division has struggled to catch up with TSMC.
Pricing details
Price hikes for various chip processes
In July, Samsung raised prices for chips manufactured using its 4nm process, known as SF4.
The price for SF4 customers in China and the US was increased by 10-15% from last month, while those in Taiwan saw a hike of 5-10%.
Prices for wafers produced by its 5nm SF5 process also rose by 10-15%, with older 8nm technology seeing an increase of nearly 10%.
Market impact
Optimism about future
Despite lagging behind TSMC in global foundry revenue, Samsung is optimistic about its future.
The company expects advanced processes to account for over half of its foundry revenue this year.
It also projects that AI and high-performance-computing applications will make up more than 30% of this revenue, up from 15-20% in late 2025.
Profit potential
Return to profit expected soon
Samsung's SF4 production line at its Pyeongtaek, South Korea plant has been running at full capacity since late last year.
The line produces logic chips for customers such as Qualcomm and base dies used in Samsung's own multi-layer high-bandwidth memory (HBM) chips.
Samsung expects its foundry unit to return to profit soon, driven by higher factory utilization, better production yields, and firmer pricing.