Samsung Targets Meta AI Chip Deal, TSMC in Crosshairs

In the dynamic landscape of semiconductor foundries, Samsung is making significant strides to rival TSMC. Recent reports indicate Samsung's potential acquisition of key clients from TSMC, with expectations of securing the next-generation AI chip manufacturing order from Meta, utilizing a cutting-edge 2-nanometer fabrication process. This development positions Samsung as the inaugural 2nm client for its own technology, introducing an intriguing dimension to the ongoing competition between TSMC and Samsung in the 2nm domain.

Sources confirm the collaborative efforts between Meta and Samsung for the 2nm foundry project, solidified during Meta CEO Mark Zuckerberg's recent visit to South Korea. Insights from undisclosed officials suggest that Zuckerberg conveyed Meta's dependence on TSMC during discussions with South Korean President Yoon Suk-yeol, highlighting the existing "unstable" scenario due to TSMC's constrained production capacity, potentially impacting Meta's long-term supply chain.

Presently, Meta relies on TSMC for the production of two AI chips. Should Samsung secure the next-generation AI chip foundry order from Meta, it signifies a notable shift from TSMC to Samsung. Analysts emphasize that Samsung's primary challenge in the semiconductor foundry sector lies in yield rates. Historical issues with yield rates prompted industry leaders like Apple, Qualcomm, and Google to transition to TSMC for their semiconductor needs. The smooth progression of Meta and Samsung's collaboration in next-generation AI chip production will pivot on the critical factor of yield rates.

Recent external disclosures also reveal Samsung's strategic move to rebrand its second-generation 3nm process as the 2nm process, prompting inquiries into potential strategic redirection.

In February of this year, Samsung Electronics proudly announced securing its maiden order for the production of a 2nm process AI chip from Preferred Networks Inc. (PFN), a prominent AI player in Japan. Established in 2014, PFN has been at the forefront of developing state-of-the-art AI chips and software, aiming to advance deep learning and IoT applications. This strategic move attracted substantial investments from major corporations such as Toyota, NTT, and Japanese robot system manufacturer Fanuc.

While PFN has collaborated with TSMC since 2016, the company has opted to leverage Samsung's 2nm node for the production of the next-generation AI chip. Insiders posit that this mutually beneficial deal positions PFN to access updated chip technology for a competitive edge, while Samsung secures a practical customer for its advanced chip technology, intensifying the competition against TSMC in the foundry domain.