Samsung Electronics has signed a $200 billion memorandum of understanding with Broadcom to produce AI chips through 2030. The deal covers memory, foundry services, and advanced technologies, marking one of the largest supply agreements in the semiconductor industry.
What the MOU covers
The non-binding agreement spans Samsung's memory chips, its contract chipmaking business (foundry), and unspecified advanced technologies. The two companies aim to collaborate on next-generation AI hardware, though specific products and timelines were not disclosed. The MOU runs until 2030, giving both sides a long runway to scale production.
Why the deal matters for Samsung's foundry
Samsung has been investing heavily in its foundry division to challenge Taiwan Semiconductor Manufacturing Company (TSMC) for AI chip orders. Broadcom, a major designer of custom chips for data centers and networking, is a key customer. The $200 billion figure suggests Broadcom expects to rely on Samsung for a significant portion of its future AI chip supply, though the MOU is not a firm contract.
Demand for AI accelerators has surged since the launch of large language models and generative AI applications. Broadcom designs chips for companies like Google and Meta, and its own networking chips are used in AI clusters. The deal with Samsung locks in capacity for memory and logic chips needed to build those systems.
What comes next
The MOU is a framework for future negotiations. Both companies will need to convert the agreement into binding purchase orders and technology-sharing pacts. Samsung's chip division faces questions about yield rates for advanced nodes, which could affect how much of the $200 billion materializes. The first concrete milestones are expected in 2025, when initial production runs are scheduled to begin.
