Samsung has secured a significant win for its foundry division, announcing a $16.5 billion (R293 billion) pact to produce AI semiconductors for Tesla. This chipmaking agreement, confirmed by South Korea’s largest company on Monday, will run through the end of 2033.
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Tesla CEO Elon Musk confirmed the Bloomberg News report on X, stating that the upcoming plant in Taylor, Texas, will be responsible for producing Tesla’s next-generation AI6 chip. Following the announcement, Samsung’s Seoul-traded shares saw a rise of up to 5%, reaching their highest point since September. A Samsung spokesperson declined to comment due to confidentiality clauses in the contract.
“The strategic importance of this is hard to overstate,” Musk, 54, wrote on X. He also stated that he has been authorized by Samsung to assist in optimizing production and will personally walk the production line.
This contract win comes at a crucial time for Samsung’s chip manufacturing operations, which have been steadily losing market share. The company, which produces its own memory chips and also fabricates semiconductors for external clients, has faced challenges in securing enough orders to fully utilize its foundry capacity. As a result, it had previously postponed the completion and operational ramp-up of its new Texas fabrication plant to 2026.
“Their foundry business has been loss-making and struggling with under-utilisation, so this will help a lot,” commented Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. Ling also suggested that “Tesla’s business may also help them to attract other customers.”
This contrasts sharply with the market leader, Taiwan Semiconductor Manufacturing (TSMC), which continues to struggle to meet overwhelming demand. According to Taipei-based TrendForce, TSMC held a dominant 67.6% share of the global foundry market in the first quarter of this year, while Samsung’s share slipped from 8.1% to 7.7% in the same period.
The new deal with Tesla is seen as a strong vote of confidence in Samsung’s upcoming fabrication technology, as both Samsung and TSMC are on track to deliver the next generation of semiconductor advancement, moving to 2-nanometer fabrication.
