Samsung Secures $16.5 Billion Chip Deal to Fuel Tesla’s Future: Repor

Samsung Electronics has reportedly signed a landmark $16.5 billion (22.8 trillion won) chip manufacturing deal with Tesla, according to Bloomberg. This agreement, set to run until the end of 2033, marks a significant boost for Samsung’s foundry division, which has faced mounting challenges in competing with industry leader Taiwan Semiconductor Manufacturing Company (TSMC). While Samsung did not officially name Tesla in its public announcement, insiders have confirmed that Tesla is the client involved.

The foundry business at Samsung, which focuses on producing chips for external clients, has not been performing at par with its competitors. Despite being one of the largest global manufacturers of memory chips, Samsung’s foundry division has struggled to maintain a competitive edge. This new partnership with Tesla is expected to revitalize the business and enhance its credibility in the global semiconductor market.

Tesla and Samsung already have an existing partnership, but this new long-term contract is expected to deepen their collaboration significantly. It is assumed that Tesla will utilize Samsung’s chip technology for a variety of applications in its electric vehicles, including self-driving systems, battery management, infotainment platforms, and other advanced vehicle technologies. Tesla’s reliance on customized chips highlights the growing importance of semiconductors in the electric vehicle (EV) industry, particularly as carmakers integrate more AI-driven and automated features into their vehicles.

The announcement of this major deal had an immediate positive impact on Samsung’s stock. On the Seoul stock exchange, shares of Samsung rose by as much as 3.5%, marking the company’s largest single-day increase in nearly a month. The financial boost comes at a critical time for the tech giant, as it seeks to recover and grow its share in the increasingly competitive foundry market.

According to data from TrendForce, TSMC held a dominant 67.6% share of the global foundry market in the first quarter of the year, whereas Samsung’s share fell to 7.7%, a decline from 8.1% in the previous quarter. This widening gap between TSMC and Samsung has raised concerns about the South Korean company’s ability to remain competitive. The Tesla deal is thus viewed as a strong vote of confidence in Samsung’s capabilities and future technologies.

Both Samsung and TSMC are investing heavily in the development of 2-nanometre chip technology, which is poised to power the next generation of electronics, including electric vehicles, artificial intelligence applications, and high-performance computing systems. These smaller, more efficient chips are essential for delivering the computing power and energy efficiency that modern and future tech products demand.

For Tesla, the deal represents a strategic move to ensure a stable supply of cutting-edge chips that are crucial to the performance and innovation of their future vehicles. As EVs become more software-driven and dependent on advanced computing, a steady and secure chip supply becomes vital. By partnering closely with Samsung, Tesla appears to be taking proactive steps to secure its technological edge in the automotive industry.

In conclusion, the $16.5 billion deal between Samsung and Tesla is a strategic milestone for both companies. It not only reinforces Samsung’s standing in the chip foundry business but also equips Tesla with the technological tools to push the boundaries of EV innovation.