Intel lands Google chip order, raising hopes for Samsung

Google is considering outsourcing a portion of its in-house AI chip production — its Tensor Processing Units, or TPUs — to Intel, according to reports.

Google has long relied on Taiwan's TSMC for foundry services, but as the chipmaker struggles to keep pace with surging AI chip demand, Intel and Samsung Electronics stand to benefit.

Citing anonymous sources, US technology publication The Information reported that Google decided to award Intel a contract to produce more than 3 million TPUs for use in 2028, after testing Intel's packaging technology for several months.

Google is expected to produce 6 million TPUs in 2027 and 2028 combined, with roughly half of that volume going to Intel. TPUs are co-designed by Google and Broadcom, and TSMC has handled production.

Nvidia, which currently entrusts all of its AI chip production to TSMC, is also testing Intel's technology for a processor that bundles four GPUs into a single unit, according to the report.

The publication said large customers like Google are seeking alternative manufacturers because TSMC cannot absorb all of the demand it is receiving.

According to market research firm Counterpoint Research, TSMC in effect dominates the global foundry market. The company held a 73 percent share in the first quarter, far ahead of second-place Samsung Electronics at 7 percent.

But AI chip demand from big tech companies — including Nvidia, Google, Amazon and Microsoft — has grown so rapidly that TSMC's production capacity has become what some describe as a bottleneck for AI development.

TSMC Chairman Wei Che-chia acknowledged the strain at a recent shareholders meeting. "Customer demand is so high that there are limits to what we can handle," he said. "We are doing our best to avoid creating a bottleneck."

With TSMC approaching full capacity, chip designers are now actively looking for alternatives.

Intel has emerged as a clear beneficiary. Industry observers say the Google TPU contract carries significance beyond the volume alone, as landing a customer of Google's scale could help Intel attract additional clients.

Intel recently secured a portion of Apple's next-generation processor orders as well, with backing from the US government. The work is expected to use Intel's most advanced 18A process node, a 1.8-nanometer-class technology.

Samsung Electronics' foundry business is also expected to gain from the TSMC bottleneck.

Samsung Electronics CEO and semiconductor division head Jun Young-hyun said Sunday, after meeting with Nvidia CEO Jensen Huang, that the two sides discussed "long-term cooperation in foundry and other areas, not just memory chips."

Samsung's foundry division is internally projecting that it could return to profitability as early as the third quarter of this year, according to sources.

Starting in the second half of this year, Samsung's foundry unit plans to begin mass production of AI5 and AI6 chips at its Taylor, Texas factory using a cutting-edge 2-nanometer process. The company is also seen as a strong candidate to win a logic chip order from US AI firm Anthropic.