Samsung Electronics shares leapt on hopes that it could pick up new orders from US rival Intel, in a development that could provide a boost to the South Korean tech group’s chipmaking division.
Shares in Samsung jumped nearly 10 per cent in morning trading in Seoul on Monday after Bloomberg had earlier reported that Intel held talks with the Korean company and Taiwan Semiconductor Manufacturing Co over outsourcing production for some of its processor chips.
The reported discussions put a spotlight on the fierce rivalry between TSMC and Samsung, the biggest and most important companies in Taiwan and South Korea, respectively.
Samsung, the world’s biggest producer of memory chips, has been on the hunt for big contracts for its foundry unit — which makes processor chips for other companies — as it competes with Taipei-listed TSMC.
$116bn
Amount Samsung is pouring into its foundry division over the next 10 years
Intel said last July it was considering outsourcing more of its chip manufacturing after it delayed by six months the launch of some of its next generation processors.
Shares in Samsung trimmed early gains and were 4 per cent higher by afternoon trading as chip-sector analysts noted that TSMC looked better placed to win the majority of any potential Intel orders. TSMC shares were little changed.
Bernstein analysts estimated Intel might outsource between 10-30 per cent of its central processing unit, or CPU, production in 2023, in a move that would boost TSMC’s revenues by 5-10 per cent.
“Samsung may get . . . a minor share in this business. Samsung is a viable choice too, but TSMC should get the major share because TSMC’s technology is ahead of Samsung’s in the next few years, with better execution,” the Bernstein analysts said.
TSMC has long been the favoured manufacturer of CPU chips for consumer electronics groups such as Apple and Huawei. These companies compete directly with Samsung in other markets, such as smartphones and other devices.
The Taiwanese group, which pioneered the independent chip foundry model, has dominated the market for decades and maintains long-term relationships with chip designers as well as device makers — arrangements that Samsung has found hard to crack.
But the Seoul-headquartered group is pouring $116bn into its foundry division over the next 10 years, in a long-term bid to overtake TSMC.
Samsung declined to comment.
Separately on Monday, shares in South Korea’s biggest carmaker Hyundai Motor were up more than 8 per cent. That builds on a gain of 20 per cent on Friday following reports of early stage talks on a car manufacturing venture with Apple.
