According to BusinessKorea, Nvidia, the world's second-largest semiconductor design company, will use Samsung's 7-nanometer (NM) extreme ultraviolet (EUV) process to produce next-generation graphics processors (GPUs). Industry experts said that Nvidia and Samsung Electronics teamed up instead of TSMC, which is very symbolic.

Foreign news media and industry sources said that Nvidia will transfer the production of its next-generation GPU (Ampere, which will be launched next year) to Samsung Electronics on June 6, which is Nvidia's first 7-nanometer product. Currently, the company is producing 12-nm GPUs. Previously, Nvidia is expected to use TSMC to produce its first 7-nanometer product. However, it seems that, contrary to expectations, Nvidia chose to cooperate with Samsung Electronics.

Nvidia is the second largest IC design company in the world with revenues of $10.39 billion in 2018. The deal with Nvidia will make it easier for Samsung to acquire large customers in the future. The GPU is Nvidia's flagship product for 5G mobile telecommunications, artificial intelligence and autonomous vehicles.

However, Taiwan's media organizations have played down the importance of the deal, saying that Nvidia chose Samsung because TSMC's 7nm production line has reached its full capacity.

Samsung Electronics also said that they focus on protecting customers rather than making profits. They added: "The semiconductor industry has doubts about the production of the Samsung 7nm EUV process, but Samsung's price for Nvidia is enough to offset this problem."

It is understood that one of Nvidia's current Samsung reasons is that its competitor AMD has launched a 7nm GPU, so Nvidia urgently needs a foundry that can produce 7nm chips at low cost. More importantly, cost reductions have become very important as sales in the cryptocurrency market have led to sales last year. In addition, Samsung is also an attractive choice, because Samsung used to produce Nvidia's GTX1050 series, Tegra and Pascal architecture chips through the 14nm process.

Industry observers are closely watching Samsung's order strategy. Recently, Samsung's foundry division announced that it has offered a special comprehensive mask set price for some startups, which is 60% of TSMC. Samsung's comprehensive mask set is cheaper than TSMC's multi-layer mask set to reduce the cost of producing a small number of products. A mask is a film used to draw circuits on a wafer.

Unlike Samsung's foundry division, which has already acquired a huge customer, Nvidia, TSMC faces a difficult situation due to Sino-US trade disputes. At present, TSMC manufactures chips for Hisilicon, a Huawei semiconductor design subsidiary. The US government's sanctions against Huawei prompted major global companies to stop trading with Huawei, but TSMC recently announced that it will continue to establish partnerships with Huawei.

The US Department of Commerce has been putting pressure on TSMC. It recently dispatched staff to the TSMC headquarters for investigation. Under pressure, Huawei has been reducing the output of TSMC. The Nikkei Asian Review reported that Huawei’s orders for TSMC fell by nearly 30%.

At the same time, the major corporate customers of the Samsung OEM division are US companies, including Nvidia, Qualcomm and IBM. This means that Samsung's foundry division is relatively unlikely to be hit hard by Sino-US trade disputes.