Samsung and Broadcom have finalized a $200 billion agreement covering memory, foundry, and packaging services.

      Samsung and Broadcom have entered into a memorandum of understanding (MOU) valued at over $200 billion, focusing on memory chips, foundry manufacturing, and advanced packaging for AI semiconductors. This agreement, revealed on Friday during an AI summit in San Francisco, will last for five years until 2030 and pertains to essential areas of the AI chip supply chain. Although it is one of the largest known semiconductor collaborations, as an MOU, it is an expression of intent rather than a legally binding agreement.

      In terms of memory, Samsung will provide Broadcom with next-generation high-bandwidth memory, specifically HBM4 and HBM4E chips, for Broadcom’s AI accelerators. For foundry services, Samsung will produce Broadcom products utilizing two-nanometer and smaller process technologies at its facility in Pyeongtaek, South Korea. This partnership also includes advanced packaging techniques that enhance the integration of memory and logic, which are becoming increasingly vital for optimizing AI silicon performance.

      Broadcom develops custom AI chips for major tech firms like Google and Meta that require chips tailored to their unique workloads instead of purchasing standard GPUs from Nvidia. In April, the company extended its AI chip collaboration with Meta until 2029, and CEO Hock Tan recently indicated that the growth in AI revenue has made pursuing organic expansion more appealing than acquisitions. By partnering with Samsung for manufacturing, Broadcom enhances its supply chain resilience beyond its current reliance on TSMC, which dominates over 90% of cutting-edge chip production.

      For Samsung, this agreement addresses ongoing concerns regarding its foundry business, where its global market share has decreased to roughly seven percent while TSMC leads the market. The company has faced challenges with yields on its two-nanometer process, but a $200 billion commitment from one of the industry's largest chip designers could alter the perspectives of investors skeptical about Samsung's competitiveness at the cutting edge. Samsung reported a record quarterly operating profit of 89 trillion won in Q2, mainly attributed to rising demand for AI memory.

      This signing coincided with a broader array of semiconductor agreements totaling approximately $950 billion between South Korean and American firms, announced during the AI summit hosted by South Korean President Lee Jae Myung. SK Hynix inked memory partnerships worth $750 billion with Nvidia and others, while Anthropic secured supply agreements with both Samsung and SK Hynix. The summit followed the introduction of an $880 billion domestic investment plan in June, which pledged Samsung and SK Hynix to establish four new chip fabrication plants in southwestern Korea.