Samsung hikes chipmaking prices by 15% amid soaring AI demand

In a latest update Samsung Electronics has raised prices for its contract chipmaking foundry services by up to 15% for new orders, driven by a massive surge in demand for artificial intelligence (AI) chips.

As reported by Reuters, the price increases primarily focus on Samsung’s advanced manufacturing processes, specifically its 4-nanometer (SF4) and 5-nanometer (SF5) nodes.

Samsung's contract manufacturing division has faced consecutive losses since pat few years.

The new pricing power shift, moving from a buyer's market to a supply-constrained environment aims to improve operating margins and repair the division's profitability.

Due to U.S. export restrictions on advanced semiconductor manufacturing equipment to China, local Chinese firms have increasingly relied on overseas foundries with some accepting the steepest end of these price adjustments.

The explosive growth of AI infrastructure has tightened global foundry capacity. Samsung has reportedly faced more orders than it can accommodate, particularly experiencing heavy demand from Chinese customers.

Meanwhile, the South Korean tech giant must carefully balance its commitments to U.S. clients and reserve a portion of its capacity for its own internal chip production.

According to industry estimates, the price hikes mark a turnaround for Samsung's foundry business, which has been a loss maker since 2022.

The division has struggled to narrow the gap with Taiwan Semiconductor Manufacturing Co, even as Samsung reported record profits, driven by soaring prices for memory chips used in AI systems.