Shares of Samsung Electronics climbed as much as 5% on Tuesday after Nvidia CEO Jensen Huang confirmed the South Korean firm is manufacturing chips tied to Nvidia’s latest artificial intelligence push, offering a potential turning point for Samsung’s struggling foundry business.
The stock was last up about 4.3% at 196,800 won, after briefly touching 198,000 won, outperforming the broader Korean market’s 2.7% gain. The rally underpins renewed investor confidence that Samsung’s contract chipmaking unit—long overshadowed by losses and execution challenges—could finally stabilize as demand for AI infrastructure accelerates.
Speaking at Nvidia’s GTC developer conference in California, Huang said Samsung is producing chips linked to technology from AI startup Groq.
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“I want to thank Samsung who manufactures the Groq LP30 chip for us and they’re cranking as hard as they can,” Huang said, adding that production is already underway and shipments are expected in the second half of the year.
Samsung also showcased Nvidia-related chips built on its 4-nanometer process, a node that has previously faced scrutiny over yield and competitiveness.
The public endorsement from Nvidia—arguably the dominant force in AI chips—carries strategic weight. It signals that Samsung’s manufacturing capabilities are meeting the performance and reliability thresholds required for next-generation AI workloads, a key concern among investors.
Foundry Unit Eyes Long-Awaited Breakeven
Samsung’s foundry division, which manufactures logic chips for external clients including Tesla and Apple, has posted billions of dollars in annual losses in recent years as it struggled to keep pace with rivals such as Taiwan’s TSMC.
Analysts say the Nvidia-linked production could help shift that trajectory. Sohn In-joon of Heungkuk Securities expects the business could reach breakeven by late next year, driven by improved utilisation rates and stronger demand for advanced-node chips tied to AI.
The logic is straightforward: AI chips require cutting-edge manufacturing processes, and securing high-profile customers like Nvidia increases both volume and credibility, two factors critical to closing the gap with industry leaders.
The development comes as global demand for AI chips continues to surge, driven by data center expansion and the need for high-performance inference and training hardware.
The AI boom offers Samsung a rare opportunity to reposition its foundry business as a strategic growth engine, rather than a loss-making segment. Unlike memory chips—where Samsung remains dominant—foundry services require sustained investment, advanced process technology, and strong customer relationships. Nvidia’s involvement could help on all three fronts.
However, rising memory chip prices—another key part of Samsung’s business—are beginning to weigh on downstream demand, particularly in smartphones. That could reduce orders for certain types of logic chips, limiting near-term gains for the foundry unit.
Sohn warned that weak mobile demand could continue to drag on earnings, even as AI-related orders improve. In addition, Samsung still faces stiff competition from established foundry leaders, meaning sustained profitability will depend on its ability to deliver consistent yields and secure long-term contracts.
Attention is also turning to potential collaborations. Advanced Micro Devices CEO Lisa Su is expected to meet Samsung Chairman Jay Y. Lee in South Korea, with discussions likely to centre on cooperation in memory and logic semiconductors. Any partnership with AMD could further strengthen Samsung’s position in the AI supply chain, particularly as chipmakers look to diversify production and reduce reliance on a single foundry provider.
Notably, the Nvidia-driven boost marks a potentially pivotal moment for Samsung. After years of heavy investment and uneven results in its foundry business, the company now has an opportunity to align itself with the fastest-growing segment of the semiconductor industry.
Analysts note that if it can convert that momentum into sustained orders and improved profitability, Samsung may finally begin to close the gap with rivals and transform its foundry unit into a core pillar of its semiconductor strategy. For now, the market reaction suggests investors are willing to give the company the benefit of the doubt—provided it can deliver on the promise of the AI era.