Meta in talks with Samsung over $5.7 billion AI chip production deal

Meta and Samsung are in discussions about a large-scale chip production deal worth approximately $5.7 billion. This was reported by South Korean newspaper Seoul Economic Daily. Under the proposed arrangement, Samsung's Foundry division would manufacture hundreds of thousands of AI chips using 2nm technology for the US tech company.

Meta intends to use the chips to train its own AI models. In addition, the company is said to want to lease part of the associated computing capacity to other businesses, which would make the investment partly commercially viable.

Negotiations are still ongoing and no signed contract has been confirmed. Neither company had publicly commented on the talks at the time of publication.

Why Meta is pursuing its own chip production

Over the past several years, Meta has invested heavily in developing and sourcing its own AI computing capacity, partly to reduce its dependence on external cloud providers such as Amazon Web Services and Microsoft Azure. The company trains large language models, including the Llama series, and requires large quantities of specialised chips to do so.

By securing production capacity at a chip manufacturer, Meta is attempting to gain priority access in a market where demand for advanced AI chips structurally exceeds supply. The most advanced chips, such as Nvidia's H100 and H200, face long lead times. Custom designs produced through a foundry provide greater control over specifications and delivery schedules.

The plan to lease part of the computing capacity to other companies aligns with a broader trend: large tech companies using their AI infrastructure not only internally, but also offering it as a service. Amazon, Google, and Microsoft already do this at scale through their cloud platforms.

Samsung Foundry as producer of 2nm chips

Samsung Foundry is the contract manufacturing arm of Samsung Electronics and competes directly with market leader TSMC of Taiwan. The 2nm process being discussed in negotiations represents some of the most advanced chip manufacturing technology currently coming to market. Both Samsung and TSMC are working on the introduction of 2nm production, where smaller transistors theoretically deliver higher computing performance at lower energy consumption.

For Samsung Foundry, an order of this size would be strategically significant. The company has struggled in recent years to attract major customers in the top segment, where TSMC holds a dominant position. A deal with Meta would considerably strengthen Samsung Foundry's standing in the AI chip market.

Hundreds of thousands of chips at the 2nm node represent an exceptionally large production order. For context, the total annual production capacity of advanced chip nodes is carefully distributed worldwide among a handful of major customers, including Apple, Nvidia, and Qualcomm.

What this means for the AI chip market

The negotiations between Meta and Samsung fit into a series of large-scale investments that US tech companies are announcing or executing to secure their AI infrastructure. Microsoft announced an investment plan of $80 billion for data centres earlier this year, and Google and Amazon also significantly increased their capital expenditure on AI hardware.

If the deal is concluded, it would also signal that Samsung Foundry is capable of meeting the requirements of major AI customers at the 2nm level. That is by no means a given: Samsung has faced production challenges at advanced nodes in recent years, which led some customers to shift their orders entirely or partially to TSMC.

For Meta, a potential deal would represent a further step towards vertical integration of its AI infrastructure, a strategy that the company, under the leadership of Mark Zuckerberg, has consistently built out over recent years through its own chip and software development.

From a European perspective, this news again underscores how the race for AI chip capacity is playing out primarily between US tech companies and Asian chip manufacturers. European companies and policymakers pursuing digital sovereignty and their own AI infrastructure are looking at a market in which access to advanced chip production is entirely dependent on players outside Europe. The proposed European Chips Act, designed to scale up domestic semiconductor production, has yet to generate production capacity that competes with TSMC or Samsung Foundry at this level.