Samsung has reportedly abandoned its pursuit of securing Baidu’s 2nm AI chip orders. The Korean firm planned to make Baidu’s chips using its cutting-edge 2nm process and mass production by the end of the year while also integrating its HBM technology. This change in plans raises concerns about its future in the AI chip sector, though Samsung’s foundry tech may not be to blame here.
According to reports, this is because of the US trade restrictions on China during Donald Trump’s second term. There are concerns about whether Samsung can continue its business in China as before. A previous report suggests the company has also paused making Baidu’s 4nm chips due to the same US trade policy. The South Korean giant is facing business challenges due to this, but things seemingly aren’t in its control.
Samsung’s struggles in the semiconductor market
According to Sedaily, Samsung and Baidu have halted the 2nm project but are turning around and exploring the possibility of collaboration in various advanced processes. “Both sides had a strong will to produce chips using the advanced 2nm process, but they have practically been leaning toward folding since late January, right after Trump’s inauguration,” the publication cites an industry source.
“There was optimism that TSMC’s inclusion in the US government’s surveillance network would open up opportunities for Samsung to collaborate with Chinese companies, but the US-China conflict is actually having a negative impact on Samsung’s business,” another industry insider said.
Samsung was optimistic about Baidu’s AI chip deal as it has been struggling to compete in both the foundry and high-bandwidth memory (HBM) markets. The Korean firm’s foundry division is not getting orders from bigger companies such as Apple, Nvidia, and AMD. These firms prefer Taiwan’s TSMC due to its superior foundry tech. Samsung desperately wanted clients like Baidu to boost its semiconductor business, but it has hit a roadblock.
The report also says that U.S. President Donald Trump is considering placing tariffs on specific semiconductor products and has threatened to repeal the Semiconductor Science Act, which provides subsidies for chip manufacturing in the U.S. If this pans out, Samsung could lose $4.75 billion in expected subsidies from the U.S. government.
For Baidu, the partnership was equally important. Due to U.S. sanctions, Baidu also can’t buy Nvidia’s cutting-edge graphics processing units (GPUs) necessary for advanced AI technology. Their collaboration with TSMC has also been blocked. Both Samsung and TSMC are the only companies in the world that can produce the advanced AI chips that Baidu needs. It’s a no-win situation for both parties.
