Seoul [South Korea], July 30 (ANI): Samsung bets on accelerating its manufacturing footprint in Texas as surging artificial intelligence demand strains advanced-chip capacity worldwide, stretching into 2028, according to a news report by The Korea Herald.

The South Korean tech firm announced plans to bring its first foundry in Taylor, Texas, online this year and begin construction on a second facility by the end of the year. The decision followed company warnings that tight memory supplies would worsen next year as leading-edge chip production struggled to match market demand.

'AI-driven memory demand is expanding at an unprecedented pace, while available industry supply continues to fall short of customer needs,' the news report quoted Samsung during an earnings call.

The company cautioned that scaling up physical production would require significant time due to construction schedules.

'Given the more than 3 1/2 year lead time from new fab construction to wafer production, a meaningful increase in supply will take time, and we expect the shortage to intensify in 2027 and persist into 2028.'

The expansion plans coincided with record financial results for the April-June quarter. As per the news report, Samsung reported revenue of 171.5 trillion won (USD 119.2 billion) and an operating profit of 89.5 trillion won (USD 65.34 billion), marking year-on-year increases of 130 per cent and 1,813.8 per cent, respectively. The semiconductor-focused Device Solutions division drove earnings with 127.5 trillion won (USD 93.08 billion) in revenue and 89.2 trillion won (USD 65.12 billion)in operating profit.

Conversely, the Device eXperience division, which manages mobile devices and home appliances, recorded an 800 billion won (USD 584 million) operating loss on 48 trillion won (USD 35.04 billion) in revenue as rising component expenses squeezed margins. Harman recorded 4.6 trillion won (USD 3.36 billion) in revenue, while Samsung Display posted 7.5 trillion won (USD 5.48 billion).

To mitigate ongoing supply pressures, clients actively sought multiyear supply commitments with the chipmaker.

'Requests for multiyear supply agreements continue to grow as AI token consumption rises exponentially,' the company said.

Samsung outlined its strategy for selecting long-term commercial partners to maintain revenue stability.

'We are negotiating primarily with customers that can provide clear visibility into future demand, which we believe will help make the memory business less vulnerable to traditional supply-demand cycles.'

Samsung finalised long-term contracts with five global data centre operators and reached final-stage negotiations with five additional major AI customers. These five-year rolling agreements, backed by initial upfront payments, were expected to cover 60 to 70 per cent of future medium- to long-term production.

As per the news report, for the second half of the year, Samsung projected further profit gains driven by next-generation HBM4 memory shipments. In its foundry business, Taylor Fab 1 will focus on 2-nanometer capacity, while Fab 2 targets mass production in 2030.

Additionally, Samsung ruled out a US Nasdaq ADR listing, citing strong internal cash generation, and announced a new robotics business office to construct a pilot facility in Gumi. (ANI)