- Chinese, US SF4 customers face 10% to 15% price increases from previous month, sources say
- Samsung produced 7% of global foundry revenue in first quarter of 2026, Counterpoint says
- SF4 line at Pyeongtaek plant has run at full capacity since late last year, source says
Aug 19 (Reuters) - Samsung Electronics has raised prices for some advanced contract chipmaking services by up to 15% for new orders, two people familiar with the matter said, as demand for AI chips tightens capacity in a business long dominated by TSMC.
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, said the sources, who spoke on the condition of anonymity because they are discussing sensitive commercial matters.
Chinese customers are among those accepting the steepest price increase, one of the sources said, underscoring how U.S. curbs on exports of advanced chipmaking equipment to China have increased local firms' reliance on overseas foundries.
The price hikes mark a turnaround for Samsung's foundry business, which has been a loss maker since 2022, according to industry estimates. The division has struggled to narrow the gap with Taiwan Semiconductor Manufacturing Co, even as Samsung reported record profits, driven by soaring prices for memory chips used in AI systems.
Samsung raised prices in July for chips made using its 4-nanometre process, known as SF4, the sources said.
Prices for SF4 customers in China and the U.S. were increased 10% to 15% from the previous month, while customers in Taiwan, home to TSMC, saw increases of 5% to 10%, according to one of the sources.
Prices for wafers produced by its 5-nanometre SF5 process rose by 10% to 15%, while those for its older 8-nanometre technology rose by nearly 10%, according to the source.
Samsung declined to comment as the company does not provide details on operational matters.
CUSTOMER LEVERAGE
Samsung produced 7% of global foundry revenue in the first quarter of 2026, compared with more than 70% for TSMC, according to research firm Counterpoint.
However, demand for AI chips has booked up much of TSMC's leading-edge capacity. 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%, up from 15% to 20% in late 2025.
With TSMC's production taken up, Samsung has more leverage to raise 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.
"If Samsung raises prices from here, its foundry business could potentially become profitable as early as next year, earlier than previously expected," Lee said.
Samsung's SF4 production line at its Pyeongtaek, South Korea, plant 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, the person said.
Samsung said in July it expects the foundry unit to return to profit in the near future, helped by higher factory utilization, better production yields and firmer pricing.
It also said then rising sales to major U.S. and Chinese customers, along with demand for HBM base dies, should help lift foundry revenue by more than double-digit percentage points in the second half from a year earlier.
Improvements in production yields have also helped Samsung win customers.
Tesla and Apple unveiled chip manufacturing deals with Samsung last year.
Samsung also announced an AI chip production deal with Broadcom in July, while Nvidia CEO Jensen Huang said in March that Samsung would manufacture its new AI inference processor.
Google is also in talks with Samsung to manufacture chips using SF4, said one of the two sources familiar with the price increases.
Google did not respond to a request for comment.
Reporting by Reuters Staff; Editing by Eduardo Baptista, Miyoung Kim and Christian Schmollinger
Source: Reuters