Samsung Electronics (005930.KS) has begun production at its Taylor, Texas, foundry plant after a surge in artificial intelligence chip orders from Tesla, according to industry sources. The Taylor fab had been scheduled to enter full operation around November, but Samsung moved the timeline forward as AI chip demand from Big Tech firms climbed, pushing the plant's utilization rate to nearly 30%. Samsung plans to lift utilization at the first Taylor plant to close to 100% by the end of the year to expand its influence in the foundry market.
The Taylor plant recently started producing wafers on a 2-nanometer process and has entered partial mass production, semiconductor industry sources said on the 15th. Utilization topped 20% as of last month and has approached 30% this month.
Samsung held an equipment move-in ceremony at the site in April and completed a tape-out — the step at which a chip design is handed over to actual wafer manufacturing — in July. Tape-out is normally followed by prototype production and verification, but Samsung advanced its mass-production schedule to meet the jump in AI chip orders, sources said. Foundry lines at the Hwaseong and Pyeongtaek campuses, which handle advanced 2- to 4-nanometer processes, are running at capacity, prompting the company to speed up the production timetable at Taylor.
The customer behind the early startup is Tesla. Samsung signed a $16.5 billion chip supply contract with Tesla last year, worth about 22 trillion won. The core product to be made at Taylor is Tesla's next-generation AI5 chip. Tesla, which is accelerating investment in full self-driving, robotics and AI data centers, is pressing for a rapid ramp-up in AI5 supply for use in its Model 3 and Model Y electric vehicles, its Cybercab robotaxi, its Optimus humanoid robot and AI data centers.
With utilization at the Taylor plant rising quickly from the current 30%, some in the industry expect it to reach 100% — effectively full capacity — around the end of the year.
Alongside raising utilization at the first plant, Samsung has begun preparations to build a second Taylor plant, targeting a groundbreaking by year-end. Industry watchers expect the second plant, seen entering operation around 2030, to adopt a next-generation 1.4-nanometer process.
The Taylor expansion is tied to Samsung's broader push in the foundry business. Market leader TSMC of Taiwan has used up most of its advanced-process capacity as AI chip orders pile up. Samsung intends to take advantage of that, using the early startup at Taylor to absorb Tesla volume steadily while courting additional customers. A faster climb in Taylor's utilization rate would also move up the point at which the foundry division returns to profit.
Industry officials also see the early ramp-up and output expansion at Taylor as a strategy to widen the gap again with China's SMIC, the industry's No. 3 player. SMIC has been raising output on the back of domestic Chinese chip demand and closing in on Samsung. According to research firm TrendForce, Samsung held 5.9% of the global foundry market in the second quarter of this year, against 5.4% for SMIC, narrowing the gap to 0.5 percentage point.
"For Samsung's foundry business right now, cutting time is more important than anything else," an official in the semiconductor industry said. "To keep the large customers it has won, it has to push Taylor's utilization to full capacity quickly while also moving fast on follow-up expansion."
