Samsung Lands $200 Billion Broadcom AI Chip Partnership in Major Foundry Push

A Samsung flag flies outside the company office in Seoul, South Korea on February 05, 2024.

Chung Sung-jun | Getty Images News | Getty Images

Samsung Electronics is making a major move to strengthen its position in the rapidly growing artificial intelligence chip industry after announcing an expanded partnership with U.S. chip designer Broadcom that could exceed $200 billion through 2030.

The agreement brings together Broadcom's expertise in designing specialized AI and communications chips with Samsung's semiconductor manufacturing and advanced packaging technologies. The partnership could become an important step in Samsung's effort to expand its foundry business and compete more aggressively in the global AI chip market.

A Major Boost for Samsung's AI Ambitions

The partnership is expected to cover several key areas of semiconductor technology, including memory chips, contract chip manufacturing, and advanced packaging.

For Samsung, securing long-term production commitments from a major chip designer like Broadcom could help increase the use of its advanced manufacturing facilities. The company has been investing heavily in next-generation semiconductor technologies as demand for AI infrastructure continues to accelerate worldwide.

Samsung said the expanded collaboration reflects its focus on providing customers with end-to-end semiconductor technologies for AI and high-performance computing applications.

Broadcom and Samsung Combine Their Strengths

The collaboration is expected to combine Broadcom's experience in developing application-specific integrated circuits (ASICs) with Samsung's advanced semiconductor manufacturing capabilities.

Unlike general-purpose GPUs, ASICs are designed for specific workloads and applications. As technology companies increasingly develop custom AI accelerators, demand for specialized chip design and manufacturing is growing rapidly.

The partnership will also reportedly involve the production of Broadcom's next-generation communications chips using Samsung's sub-2-nanometre process technology, a key area of competition among the world's leading chip manufacturers.

The companies also plan to work together on next-generation high-bandwidth memory (HBM) products, which are becoming increasingly important for AI data centers and advanced computing systems.

Samsung's Battle to Catch Up in Foundry Manufacturing

The Broadcom partnership comes as Samsung continues its efforts to narrow the gap with TSMC, the world's leading contract chip manufacturer.

The foundry business has become increasingly important as major technology companies seek manufacturing partners capable of producing advanced processors for AI, cloud computing, smartphones, automotive systems, and other high-performance applications.

Samsung has been pushing to secure more orders for its advanced 2-nanometre manufacturing technology. The company has also been in discussions with major technology companies about future semiconductor cooperation.

The company previously secured a major $16.5 billion logic chip manufacturing contract with electric vehicle maker Tesla, highlighting its broader ambitions to attract large technology customers.

Why the Partnership Matters for the AI Chip Industry

The AI boom is changing the semiconductor industry.

For years, companies developing AI systems relied heavily on powerful general-purpose processors. But the rapid growth of AI applications is encouraging technology companies to develop custom chips designed for specific workloads.

This shift could create huge opportunities for companies involved in:

• AI accelerator design

• Custom ASICs

• Advanced semiconductor manufacturing

• High-bandwidth memory

• Chip packaging

• Data center infrastructure

Samsung's expanded relationship with Broadcom places the South Korean technology giant closer to several of these fast-growing markets.

The Growing Importance of HBM for AI

High-bandwidth memory has become a critical component of modern AI infrastructure.

Advanced AI systems require enormous amounts of data to be processed quickly. HBM technology helps AI accelerators access large volumes of data at high speeds, making it increasingly important for AI servers and data centers.

Samsung's plans to collaborate with Broadcom on next-generation HBM products could therefore give the company another opportunity to strengthen its position in the AI semiconductor supply chain.

A New Phase in the AI Chip Race

The semiconductor industry is entering a new phase in which chip design, manufacturing, memory, and advanced packaging are becoming increasingly interconnected.

The Samsung-Broadcom partnership highlights how companies are building deeper relationships to meet the massive demand created by artificial intelligence.

For Samsung, the deal could help improve the utilization of its advanced manufacturing facilities, attract more long-term customers, and strengthen its foundry business.

For Broadcom, the partnership could provide access to advanced manufacturing capabilities and next-generation semiconductor technologies needed to support its growing portfolio of custom AI and communications chips.

What Comes Next?

The AI chip market is expected to remain highly competitive as technology companies race to build faster and more efficient AI infrastructure.

Samsung's expanded partnership with Broadcom could become a significant part of that competition. If the collaboration develops as planned, it could help Samsung strengthen its position in advanced chip manufacturing while giving Broadcom greater capacity to deliver specialized processors for the next generation of AI systems.

The biggest question now is whether Samsung can turn major partnerships and advanced manufacturing investments into sustained momentum in the global foundry market.

As AI demand continues to grow, the battle for control of the semiconductor supply chain is only getting more intense and the Samsung-Broadcom partnership could be one of the developments to watch closely.