Samsung gets a Baidu chip deal

Samsung Electronics landed an order from China’s internet giant Baidu to manufacture chips tailored to artificial intelligence (AI) applications - also known as AI chips - in a landmark deal bringing the two tech powerhouses together.

The Korean electronics giant said Wednesday that it will produce two types of Baidu’s Kunlun processor, which is built on an architecture for the cloud, AI and edge computing, a technology that brings computation and data storage closer to the devices being used.

Samsung will deploy its 14-nanometer process along with other technologies to improve quality in transmitting power and electronic signals.

The agreement marks the first time for two companies to partner in the semiconductor area and could help Samsung take the lead in next-generation chipmaking technology, where its market share falls behind Taiwan’s TSMC.

Baidu said that advanced technology was a main factor in choosing Samsung as the manufacturer.

“Baidu Kunlun is a very challenging project since it requires not only a high level of reliability and performance at the same time, but is also a compilation of the most advanced technologies in the semiconductor industry,” said Jian Ouyang, principal architect for the Kunlun chip team at Baidu.

“Thanks to Samsung’s state-of-the-art process technologies and competent foundry services, we were able to meet and surpass our goal to offer superior AI user experience,” he said in a statement.

Lee Sang-hyun, vice president of foundry marketing at Samsung Electronics, hailed the deal as “an important milestone” as the company tries to develop and mass-produce AI chips.

Samsung is aggressively moving into producing next-generation chips to become the top player in the foundry business or the custom chipmaking business.

As a part of that effort, it plans to invest 133 trillion won ($115 billion) in its non-memory chip business by 2030. Non-memory refers to a wide variety of chips including processors, image sensors and voltage regulators and includes the foundry business.

Attaining the top spot in that industry area has become something of a national mission as the Moon Jae-in administration announced a similar vision with Samsung.

The government announced in May that the government will invest 1 trillion won and introduce semiconductor-focused education programs, among other support measures, in an effort to help the country become a global leader in the non-memory semiconductor industry by 2030.

The administration is aiming for a market share of 35 percent in the global foundry business and plans to create 60,000 jobs specializing in system semiconductors by 2030.

TSMC currently holds dominance in the foundry business with a 52.7 percent market share in the fourth quarter, according to market tracker TrendForce, followed by Samsung at 17.8 percent.

Samsung, however, is on track to expand its market share by clinching a series of deals to mass-produce high-end processors with Qualcomm, Lenovo and Motorola.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]