Samsung Electronics Gains Ground as Major Tech Firms Seek TSMC Alternatives

Key Takeaways

Table of Contents

Major technology firms including Google, AMD, BYD, and Tesla have approached Samsung Electronics about advanced chip manufacturing as TSMC grapples with capacity limitations.
Samsung is in discussions with Google regarding production of future Axion processors and Tensor Processing Units, both slated for approximately 2028.
Electric vehicle manufacturer BYD is exploring Samsung’s foundry for next-generation autonomous driving chips.
AMD is considering Samsung as a manufacturing partner for upcoming CPU designs.
Only three companies—TSMC, Samsung, and Intel—possess the capability to manufacture cutting-edge semiconductors at volume.

As artificial intelligence infrastructure demands surge, TSMC’s production capacity for advanced semiconductors is reaching its limits — creating an opportunity for Samsung to capture overflow business.

According to a Wednesday report from Nikkei Asia, Samsung Electronics has experienced an uptick in contract manufacturing requests from prominent global technology companies, including Google, AMD, BYD, and Tesla. The information comes from six sources familiar with the discussions.

Shares of Samsung advanced approximately 1% following the disclosure.

Samsung Electronics Co., Ltd., SMSD.L

TSMC’s manufacturing pipeline is heavily allocated to current clients — including Nvidia, Apple, AMD, Broadcom, Marvell, and MediaTek — creating limited availability for new production commitments in the immediate future. While TSMC has announced capacity expansion initiatives, constructing semiconductor fabrication facilities requires substantial capital investment and multi-year timelines. This bottleneck is prompting certain customers to explore alternative manufacturing partners.

Samsung’s Potential Manufacturing Pipeline

Google is reportedly negotiating with Samsung to manufacture its upcoming Axion processor lineup, anticipated to debut around 2028. Additionally, Google is evaluating Samsung’s foundry capabilities for a segment of its Tensor Processing Unit production, the specialized chips powering its AI computing infrastructure, also targeting a 2028 timeframe.

AMD is exploring the possibility of having Samsung produce certain future central processing units. Chinese electric vehicle leader BYD is in conversations regarding manufacturing of its next-wave autonomous driving semiconductor solutions with Samsung. Tesla has also been identified in the report as having initiated inquiries.

It’s important to note these represent preliminary negotiations rather than finalized production agreements.

The Elite Foundry Trio

TSMC, Samsung, and Intel currently represent the exclusive group of manufacturers capable of producing state-of-the-art chips at commercial scale. This limited competitive landscape provides all three companies significant positioning power in a marketplace experiencing accelerating AI-driven demand.

Intel has been actively pursuing external foundry customers for its advanced manufacturing capabilities, although its production historically focuses on internal chip designs.

TSMC shares (TSM) declined roughly 3.5% on Wednesday. AMD (AMD) experienced a more significant drop of approximately 7.3%, while Intel (INTC) fell 8.45%. GOOGL registered a modest gain of 1.06%.

Samsung’s foundry division has encountered yield performance and execution difficulties in recent periods, which contributed to some customers migrating to TSMC. The conversion of these preliminary inquiries into confirmed production contracts will hinge on Samsung’s capability to deliver the quality standards and production volumes that customers require.

According to TipRanks, TSMC maintains a Strong Buy consensus rating with an average price target of $465, suggesting approximately 9% upside potential from present levels. TSMC stock has gained roughly 40.7% year-to-date.

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