Samsung has signed a $16.5 billion Samsung Tesla Chip Deal as part of a strategic effort to revive its waning chip foundry business. While the company did not publicly name its client, insiders confirmed the agreement with Tesla.
The contract runs through 2033 and is a huge positive for Samsung as it continues to try to recover market share amid the intense chip manufacturing market.
The tech giant is now making a significant move in favor of getting in touch with a motor chip manufacturer. Samsung aims to become a TSMC contender and supply chips to leading houses like Apple, Nvidia, and Qualcomm.
Despite ruling the memory chips market, Samsung has fallen behind in foundry services. According to Pak Yuak, an analyst for Kiwoom Securities, Samsung's foundry division lost more than $3.63 billion in the first half of this year.
The question now is whether Samsung and Tesla’s Chip Deal involves the company's advanced chip manufacturing at 2 nm. According to analysts like Lee Min-hee from BNK Investment & Securities, 'Samsung is still working on improving the production quality of these chips.'
While Tesla semiconductor supply details and precise requirements for its chips are unknown, the deal may give Samsung the impetus to expand manufacturing. The agreement comes amid South Korea's strategic push to strengthen industrial ties with the United States, especially in semiconductors and shipbuilding.
The Samsung-Tesla Chip Deal is a turning point for Samsung. After losing several clients to TSMC, the company is taking bold steps to reclaim its presence in the high-end semiconductor supply space.
This partnership contrasts past arrangements for memory chips, signaling a shift toward services for cutting-edge customers like Tesla. If Samsung can satisfy the EV giant on scale and efficiency, this would mark the moment when Samsung can finally solidify its comeback for global foundry leadership.
This also strengthens the Samsung-Tesla Partnership, which hopes to find niche semiconductor applications in future Tesla product innovations and marry Samsung's intention toward chip excellence.