By Kim Yoo-chul
Samsung Electronics has won a contract to manufacture Nvidia's new graphic processing unit (GPU) chips on 14-nanometer processing technology.
The Nvidia deal could benefit both Samsung Electronics and GlobalFoundries in the United States as the two firms have formed a manufacturing tie-up, allowing them to fabricate identical chips at their factories in Korea and the United States for 14-nanometer customers including Apple and Qualcomm.
"The latest agreement between Samsung and Nvidia is another positive factor lifting Samsung's logic chip business unit. The timing looks good as increased foundry customers justify the Korean chip giant's moves to find new revenue sources," said a source familiar with the deal, last week.
He estimated the value of the deal to be "a few million dollars" not that much compared to Samsung's recent agreements with Apple, Sony and Qualcomm.
GPU is a co-processor that takes on graphical calculations and transformations; therefore, the main CPU does not have to be burdened by them.
The use of a GPU could greatly increase the performance of smartphones and tablets, especially when used for data-intensive tasks such as three-dimensional (3D) gaming.
Samsung spokesman in Seoul said the company has a principle not to comment on client-related issues due to the sensitivity. Officials at Nvidia's Korean office weren't available for comment.
The Nvidia's motivation comes after the global GPU giant became consistent in cutting its heavy reliance on TSMC of Taiwan, the biggest Samsung threat to the foundry chip business, as Samsung is on track to improve production yields of its 14-nanometer chips.
From a technology perspective, a smaller nanometer structure makes for faster and more energy efficient chips.
The Samsung-GlobalFoundries alliance has greatly cut worries over "geopolitical risks," which were previously regarded as the biggest challenging factor for Samsung to back more clients as Korea is still technically at war with North Korea.
GlobalFoundries won the rights to license the 14-nanometer design from Samsung and that allows it to duplicate Samsung processes.
"The Samsung-Nvidia deal means that there is no enemy and friend in businesses," said another source.
The two companies are still involved in legal tussle after Nvidia sued Samsung over allegations of patent infringement relating to its GPU technology.
Samsung countersued Nvidia right after Nvidia's decision and the cases are pending hearings to take place in a court in the United States.