Samsung Elec's Foundry Push Boosted by $200B AI Deal

Samsung Elec’s Foundry Push Is Boosted by A $200 Billion Broadcom AI Chip Cooperation

Samsung Electronics (005930.KS), opens new tab, announced on Saturday that it has reached an agreement with Broadcom (AVGO.O), a U.S. chip designer, to expand collaboration in memory chips, contract chip manufacturing, and advanced packaging, which is expected to reach over $200 billion by 2030.

Gaining long-term production commitments from Broadcom, one of the top creators of custom AI circuits in the world, could increase utilization at Samsung’s cutting-edge manufacturing facilities and help the company win the race to deliver AI chips. According to a statement from the firm, “the expanded collaboration reflects Samsung’s focus on supporting customers with end-to-end semiconductor technologies across an increasingly diverse range of AI and high-performance computing applications.”

The agreement coincides with the growing demand for specialized chip design and manufacturing partnerships as multinational technology businesses create their own proprietary AI accelerators instead of depending just on general-purpose graphics processors.

The memorandum of understanding between the two companies highlights Samsung’s efforts to strengthen its position in AI chips by extending its long-term relationships with Broadcom in the face of rising demand for specialized AI processors.

Over the next five years, Samsung’s manufacturing capabilities will be combined with Broadcom’s proficiency in creating application-specific integrated circuits (ASICs), or chips for particular jobs.

According to Samsung, the agreement calls for Samsung’s sub-2-nanometer process technology to be used in the production of Broadcom’s next-generation communications chips, which are intended for high-speed data transfer.

Additionally, the two will work together on high-bandwidth memory (HBM) devices of the future.

As it looks to close the gap with industry leader TSMC (2330.TW) and create new doors by courting significant technology clients, the alliance may help bolster Samsung’s foundry division.

Co-CEO and head of the chip division Jun Young-hyun stated last month that he spoke with Jensen Huang, CEO of Nvidia (NVDA.O), about next-generation foundry cooperation and opened a new tab, encompassing future HBM4E and HBM5 memory products.