Google's consideration of Samsung Electronics (005930.KS) as a production partner for key components of its 10th-generation Tensor Processing Unit (TPU, code-named Ice Fish), a next-generation artificial intelligence (AI) chip, reflects an effort to overcome the limitations of an AI supply chain that had relied entirely on Taiwan's TSMC by diversifying its sources, analysts say. Some interpret it as a strategic choice to secure a stable, early supply of high-bandwidth memory (HBM), which determines the performance of AI accelerators. Google, which shifted its mobile application processor (AP) volumes for smartphones to TSMC in 2024, has signaled cooperation with Samsung Electronics' foundry division again after about two years, expanding the partnership between the two companies across the entire AI spectrum.
The global advanced foundry market has been effectively monopolized by TSMC. According to market research firm Counterpoint Research, TSMC recorded a 73% share of the foundry market in the first quarter of this year, far ahead of second-place Samsung Electronics (7%). However, as demand for AI chips has surged, TSMC's production capacity has reached a critical point. The bottleneck has intensified as global Big Tech companies including Nvidia and Apple have secured TSMC's leading-edge processes below 3 nanometers (nm, one-billionth of a meter). TSMC Chairman Wei Che-chia also said at a shareholders' meeting on the 9th of this month, "Customer demand is so high that there is a limit to handling it," adding, "We are doing our best to ensure that TSMC does not cause a bottleneck."
Big Tech companies with their own semiconductor design capabilities have accordingly begun adopting multi-foundry strategies to secure stable supply chains. A representative example is Apple's preliminary agreement to produce some of its iPhone chips at Intel. Samsung Electronics has also used this opportunity to secure about 25 trillion won (16.5 billion dollars) worth of Tesla's next-generation autonomous driving chips (AI5 and AI6), followed by orders for Nvidia's language processing unit (LPU) "Grok3" and others, broadening its base of global clients.
The component Google has approached Samsung Electronics about in its 10th-generation TPU project, targeted for mass production in 2028, is the memory input/output die (I/O Die). The I/O die is a key connection plate that helps data flow without congestion between the computing unit and the HBM. It is a core component called a base die or logic die depending on the memory company. Google is considering a dual configuration in which the core computing chip is entrusted to TSMC's 1.4nm process, while the I/O die responsible for memory connection uses Samsung Electronics' 2nm process.
This order discussion carries significant technical meaning in that Samsung Electronics has entered the logic die domain that TSMC had effectively monopolized. Samsung Electronics has accumulated its own logic die technology during the development of sixth-generation HBM (HBM4), in a method where its System LSI division designs the chip and its foundry division produces it with a 4nm process. This means the logic die capability that had been used within Samsung Electronics' internal ecosystem has gained an opportunity to be adopted in Google's core AI accelerator supply chain.
Analysts say Google's pursuit of foundry cooperation is a strategic move to secure a stable, early supply of HBM, an essential memory for the AI market. AI accelerator production is directly linked to HBM supply and demand. From Google's perspective, the calculation is that by allocating I/O die volumes to Samsung Electronics, it will gain priority in future negotiations for next-generation HBM volumes to be installed in the 10th-generation TPU. The two companies have a history of jointly producing Tensor chips for Pixel phones from 2021 to 2024, and have maintained a close cooperative relationship, with Samsung supplying more than 60% of the HBM volume used in Google's TPUs last year.
Samsung Electronics has gained an opportunity to prove the competitiveness of its integrated device manufacturer (IDM) turnkey solution, which provides foundry fine processing, HBM, and advanced packaging in one package. If the order materializes, the turn to profit at Samsung Electronics' non-memory (foundry and System LSI) division, which had suffered weak earnings, is also expected to gain momentum. According to Korea Investment & Securities, Samsung Electronics' non-memory business is expected to turn to profit, recording operating profit of 154 billion won in the fourth quarter, after posting a loss of 388 billion won in the second quarter and a loss of 79 billion won in the third quarter of this year. It is then projected to enter a full-fledged turnaround phase in which quarterly operating profit rises to 731 billion won in the fourth quarter of 2027, generating annual earnings in the 2 trillion won range.
