Samsung Electronics is raising prices for some advanced contract chipmaking services by as much as 15% as the global artificial intelligence boom tightens manufacturing capacity and gives the South Korean technology giant greater pricing power in a business long dominated by Taiwan Semiconductor Manufacturing Co.
The price increases mark an important shift for Samsung’s foundry operation, which has struggled with weak utilization, production yields and a persistent technology gap with TSMC. After years of losses, the business is now benefiting from the surge in demand for AI processors and high-performance computing chips.
Two people familiar with the matter told Reuters that Samsung increased prices in July for chips manufactured using its 4-nanometre SF4 process. Prices for SF4 customers in China and the United States rose by between 10% and 15% from the previous month, while increases for customers in Taiwan were between 5% and 10%.
Prices for wafers produced using Samsung’s 5-nanometre SF5 process increased by 10% to 15%, while prices for its older 8-nanometre technology rose by almost 10%, according to one of the sources.
Samsung declined to comment, citing its policy of not discussing operational matters.
The increases are notable because Samsung has historically been the challenger in contract chip manufacturing, competing against TSMC for customers that design chips but outsource production. TSMC accounted for more than 70% of global foundry revenue in the first quarter of 2026, compared with about 7% for Samsung, according to Counterpoint Research.
Yet the AI boom is beginning to change the balance of power.
Demand for advanced chips used in AI accelerators, inference processors and high-performance computing has absorbed much of TSMC’s leading-edge capacity. That has created an opportunity for Samsung to attract customers seeking additional manufacturing capacity, while allowing the company to charge more for scarce production slots.
“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, an analyst at BNK Investment & Securities.
Lee said the stronger pricing environment could allow Samsung’s foundry operation to become profitable as early as next year, earlier than previously expected.
The development is necessary for Samsung because its foundry business has been loss-making since 2022, even as the company’s overall earnings have surged on record demand and prices for memory chips used in AI systems.
Samsung’s memory business has been one of the biggest beneficiaries of the AI infrastructure boom, particularly through high-bandwidth memory, or HBM, used alongside advanced processors. Its foundry operation, however, has faced a more difficult competitive environment.
The latest pricing power suggests that the economics of the business may finally be turning.
Samsung expects advanced manufacturing processes to account for more than half of its foundry revenue this year. AI and high-performance computing applications are expected to account for more than 30% of foundry revenue, up from an estimated 15% to 20% in late 2025.
That shift is strategically important because advanced-node manufacturing carries higher revenue potential and gives Samsung exposure to the fastest-growing segment of the semiconductor market.
Samsung is also benefiting from stronger utilization of its manufacturing facilities.
Its SF4 production line at its Pyeongtaek plant in South Korea has been operating at full capacity since late last year, according to a person familiar with the company’s operations. The line produces logic chips for customers including Qualcomm, and base dies used in Samsung’s own HBM products.
Higher utilization matters because foundries have enormous fixed costs. A factory running below capacity can generate substantial losses even when its technology remains competitive. Filling more production lines spreads those fixed costs over a larger volume of wafers and can materially improve margins.
Samsung has indicated that this is already happening.
The company said in July that it expected its foundry operation to return to profitability in the near future, supported by higher utilization, improved yields and stronger pricing. It also forecast that foundry revenue would rise by more than double-digit percentage points in the second half from a year earlier, helped by increased orders from major U.S. and Chinese customers and demand for HBM base dies.
Improved production yields are another critical factor.
One of Samsung’s biggest challenges in advanced foundry manufacturing has been producing chips at sufficiently high yields to compete economically with TSMC. Even if a process is technically capable of producing an advanced chip, poor yields can make the process too expensive for customers.
Better yields therefore improve both Samsung’s competitiveness and profitability, giving customers greater confidence in the company’s ability to deliver chips at scale. The company’s expanding customer pipeline suggests those improvements are beginning to translate into commercial opportunities.
Tesla and Apple unveiled chip manufacturing agreements 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 Nvidia’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.
Those relationships could prove strategically valuable because major technology companies want multiple manufacturing sources as demand for AI processors accelerates.
The geographic composition of Samsung’s latest orders also highlights another important dynamic.
Chinese customers have been aggressive in seeking Samsung’s advanced manufacturing capacity, according to the sources. Some are accepting the steepest price increases.
That demand is partly linked to U.S. restrictions on the export of advanced semiconductor manufacturing equipment and technologies to China. Those controls have constrained China’s ability to develop some advanced chipmaking capabilities domestically, increasing the importance of overseas foundries that can manufacture sophisticated processors.
For Samsung, Chinese demand provides an additional source of growth. But it also places the company in a sensitive position between Washington and Beijing.
Samsung must balance demand from Chinese customers with orders from U.S. technology companies while reserving capacity for chips used in its own products. The company’s ability to raise prices across different customer groups indicates that capacity allocation is becoming an important competitive tool.
The broader implication is that the AI boom is changing the economics of semiconductor manufacturing. For much of the past decade, foundry competition centered on which company could develop the most advanced process technology and manufacture chips at the lowest cost. The explosion in AI spending has introduced another variable: access to capacity itself.
When customers are competing for limited leading-edge production slots, a foundry with credible technology can exercise considerably more pricing power.
That is particularly favorable for Samsung because it does not need to overtake TSMC immediately to improve its financial performance. Capturing a relatively small share of the additional demand generated by AI could be enough to raise factory utilization, improve margins and make the foundry business profitable.
The challenge is maintaining that momentum.
TSMC remains far ahead in market share, customer relationships and advanced manufacturing experience. Its scale also provides significant advantages in capital expenditure, research and development and production efficiency.
Samsung will therefore need more than temporary capacity shortages at TSMC to establish itself as a durable second source for advanced chips.
Winning and retaining customers such as Nvidia, Broadcom, Google, Qualcomm, Apple and Tesla could be more important than simply raising prices. Major chip designers typically require years of process development, testing and qualification before committing large volumes to a foundry.
If Samsung can demonstrate consistent yields and reliable delivery on those projects, analysts believe the current pricing gains could mark the beginning of a broader turnaround rather than a temporary benefit from tight capacity.
