Samsung Secures $16.5 Billion Deal with Tesla for Next-Gen AI Chips

Samsung Secures Tesla AI Chip Deal For $16.5 Billion, Production Set For Texas

Samsung has secured a renewed partnership to make AI chips for Tesla cars in a deal that's worth $16.5 billion. The order was first spotted within a regulatory finding late on July 27, with the deal set for an unnamed consumer tech company. Elon Musk, Tesla's CEO, soon posted on X to say the deal was for his car business. Musk said, "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate." Samsung has been building a new plant in Texas that it had initially planned to open in 2024, but it remains unopened and that may be the case until 2026. According to a report from Nikkei Asia in early July, the company has been struggling to find enough customers to justify opening the new plant. Musk also confirmed that Tesla will be involved in "optimizing" the production process for Samsung at its Texas factory. He says he'll be walking the fabrication line himself, and confirms the location is near to his own home. Samsung is producing the current A14 chip for Tesla, while TSMC won the deal to produce the A15 chip. For the A16, Samsung will be back onboard. This new deal lasts until 2033, so it's likely designed to keep Samsung producing the A17 and beyond. Musk said on X, "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher." Tesla's self-driving cars first debuted last month in Austin, Texas. The limited tests saw safety drivers included in the vehicle in case of emergencies. Over the weekend, Tesla confirmed it's also testing its self-driving vehicles in the United Kingdom with examples in London and Swindon. That second location includes a difficult roundabout, which will be one of the big challenges for self-driving cars making their way to the UK.

Samsung bags $16.5B next-gen chip build contract with Tesla

Musk: 'I will walk the line personally to accelerate the pace of progress' Samsung Electronics has scored a $16.5 billion contract to make the silicon to power Tesla's next-gen self-driving computer hardware. The firm is set to produce this from a new fab it is building in Texas, according to Tesla CEO Elon Musk. The Korean technology giant published a disclosure on its investor site today detailing a "supply agreement for semiconductor contract manufacturing" worth ₩22,764,764,160,000, or approximately $16.5 billion at current exchange rates. Samsung's disclosure names the contracting party only as a "large global company," claiming that the name and other contract terms are being withheld "in accordance with the counterparty's request to maintain business confidentiality." However, a post on the website formerly known as Twitter by Tesla chief Elon Musk appears to give away the game. "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," said Musk. We asked both companies for further comment. Samsung already has a semiconductor fabrication site in Austin, Texas, and is constructing a new facility near the town of Taylor, expected to come online in 2026, although it has been subject to delays. More than a year ago, Samsung said it was trying to secure $6.4 billion in funding under the previous US administration's CHIPS Act program to help with the costs of the new fab, and it was planning leading-edge logic production lines for 4nm and 2nm chips, as well as an R&D facility, and a packaging plant for High Bandwidth Memory (HBM). Samsung already makes the key silicon for what Musk refers to as "AI4," or AI hardware v4, the tech at the heart of Tesla's vehicles. It is understood to be based on Samsung's Exynos processor design, itself based on the Arm architecture. According to Musk's posting, the next iteration of the silicon, AI5, is scheduled to be manufactured by Samsung's big rival in the semiconductor manufacturing stakes, Taiwanese firm TSMC. This will be produced initially in Taiwan, but later from one of the chip contract manufacturer's fabrication plants located in Arizona. This means that production of the AI6 silicon could be several years away, and won't necessarily help Samsung with its current woes. Earlier this month, it posted an operating profit of ₩4.6 trillion ($3.3 billion), some way below the ₩6.3 trillion financial analysts had forecast. Samsung continues to struggle with technical difficulties with its high-performance HBM3E memory, which was targeted at the lucrative AI market. Nvidia reportedly chose parts from SK hynix instead, and Samsung was so chastened by the experience that it replaced the leaders of its memory and foundry businesses. Musk followed up his initial post on Twitter X with another claiming that Samsung had agreed to allow Tesla to assist in "maximizing manufacturing efficiency." He added: "I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house."

Musk says Tesla, Samsung Electronics sign $16.5 billion chip supply deal

SEOUL, July 28 (Reuters) - Tesla (TSLA.O), opens new tab CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics (005930.KS), opens new tab, a move expected to bolster the South Korean tech giant's loss-making contract manufacturing business. Samsung shares rose more than 4% after the news. "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," Musk said in a post on X on Monday. If Musk was referring to Samsung's upcoming Taylor, Texas, plant, the deal could revive the project that has faced delays amid Samsung's struggles to retain and win major customers. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house," Musk said on his social media platform. Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. Three sources briefed about the matter told Reuters that Tesla (TSLA.O), opens new tab was the customer for the deal. The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC (2330.TW), opens new tab and SK Hynix (000660.KS), opens new tab. This lag has weighed heavily on its profits and share price. Samsung, the world's top memory chip maker, also makes logic chips designed by customers through its foundry business. Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung's foundry business, which he estimated exceeded 5 trillion won ($3.63 billion) in the first half of the year. Analysts say Samsung has struggled with the defection of key clients to TSMC for advanced chips. TSMC counts Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Qualcomm (QCOM.O), opens new tab among its customers. The Samsung-Tesla deal may also be significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs. Samsung is grappling to boost production yields of its latest 2-nanometer technology, but the order is unlikely to involve the cutting-edge tech, said Lee Min-hee, an analyst at BNK Investment & Securities. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said. ($1 = 1,378.7000 won) Reporting by Heekyong Yang and Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Business * ADAS, AV & Safety * Sustainable & EV Supply Chain

Musk says Tesla, Samsung Electronics sign chip supply deal

SEOUL, July 28 (Reuters) - Tesla CEO Elon Musk said on Monday that the U.S. automaker has signed a deal to source chips from Samsung Electronics (005930.KS), opens new tab, a move expected to bolster the South Korean tech giant's loss-making contract manufacturing business. On Saturday, Samsung announced a $16.5 billion chip supply deal with a major global company, without naming the client. It said the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. Three sources briefed about the matter told Reuters that Tesla (TSLA.O), opens new tab was the customer for the deal. The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix (000660.KS), opens new tab. This lag has weighed heavily on its profits and share price. Samsung, the world's top memory chip maker, also makes logic chips designed by customers through its foundry business. Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung's foundry business, which he estimated exceeded 5 trillion won ($3.63 billion) in the first half of the year. Analysts say Samsung has struggled with the defection of key clients to TSMC for advanced chips. TSMC counts Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Qualcomm (QCOM.O), opens new tab among its customers. The Samsung-Tesla deal is also significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs. It is not clear how the order would affect Samsung's plan to start production at its new factory in Texas, which has been delayed as it struggles to win major customers. Samsung is grappling to boost production yields of its latest 2-nanometer technology, and the order is unlikely to involve the cutting-edge tech, Lee Min-hee, an analyst at BNK Investment & Securities, said. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said. ($1 = 1,378.7000 won) Reporting by Heekyong Yang and Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Business * ADAS, AV & Safety * Sustainable & EV Supply Chain

Samsung Elec signs chip supply deal with Tesla, sources say

SEOUL, July 28 (Reuters) - Samsung Electronics (005930.KS), opens new tab has signed a deal to supply chips to Tesla Inc (TSLA.O), opens new tab, two people briefed about the matter told Reuters on Monday, in a significant boost to the South Korean tech giant's loss-making contract manufacturing business. On Saturday, Samsung announced a $16.5 billion chip supply deal with a major global company, without naming the client. It said the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix (000660.KS), opens new tab. This lag has weighed heavily on its profits and share price. Samsung, the world's top memory chip maker, also makes logic chips designed by customers through its foundry business. Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung's foundry business, which he estimated exceeded more than 5 trillion won ($3.63 billion) in the first half of the year. Analysts say Samsung had struggled with the defection of key clients to TSMC for advanced chips. TSMC counts Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Qualcomm (QCOM.O), opens new tab among its customers. The deal with Tesla comes as South Korea is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or cut potential 25% U.S. tariffs. It is not clear how the order would affect Samsung's plan to start production at its new factory in Texas, which has been delayed as it had struggled to win major customers. Samsung is grappling to boost production yields of its latest 2-nanometer technology, and the order is unlikely to involve the cutting-edge tech, Lee Min-hee, an analyst at BNK Investment & Securities, said. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said. ($1 = 1,378.7000 won) Reporting by Heekyong Yang and Hyunjoo Jin and Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Business * ADAS, AV & Safety * Sustainable & EV Supply Chain

Musk says Tesla, Samsung sign $16.5 billion chip supply deal

SEOUL, July 28 (Reuters) - Tesla (TSLA.O), opens new tab CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics (005930.KS), opens new tab, a move expected to bolster the South Korean tech giant's loss-making contract manufacturing business. Samsung's shares jumped as much as 6.8% to their highest since September last year after news of the deal. Musk said Samsung's new chip factory in Taylor, Texas will make Tesla's next-generation AI6 chip, potentially re-energizing the project that has faced long delays amid Samsung's difficulties in retaining and attracting major clients. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house," Musk said in a post on X on Monday. "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher," he said in another post. According to a senior analyst at NH Investment & Securities, Ryu Young-ho, Samsung's Taylor fab "so far had virtually no customers, so this order is quite meaningful". In October, Reuters reported that Samsung had postponed taking deliveries of ASML (ASML.AS), opens new tab chipmaking equipment for its Texas factory as it had not yet won any major customers for the project. It has already delayed the plant's operational start to 2026. POTENTIAL PRODUCTION TIMELINE While no timeline was provided for AI6 chip production, Musk has previously said that next-generation A15 chips will be produced at the end of 2026, suggesting A16 would follow. Lee Dong-ju, an analyst at SK Securities, expects production in 2027 or 2028, but Tesla has a history of missing its targets. Samsung currently makes Tesla's A14 chips, which power its Full Self-Driving driver assistant system, while TSMC is slated to make the AI5, initially in Taiwan and then Arizona, Musk has said. Item 1 of 2 A Tesla Cybercab is displayed at the Los Angeles Auto Show, in Los Angeles, California, U.S., November 21, 2024. REUTERS/David Swanson/File Photo [1/2]A Tesla Cybercab is displayed at the Los Angeles Auto Show, in Los Angeles, California, U.S., November 21, 2024. REUTERS/David Swanson/File Photo Purchase Licensing Rights, opens new tab Samsung, the world's top memory chip maker, also produces logic chips designed by customers through its foundry business. The Texas project is central to Samsung Chairman Jay Y. Lee's strategy to expand beyond its bread-and-butter memory chips into contract chip manufacturing. Samsung currently holds just 8% of the global foundry market, far behind industry leader TSMC (2330.TW), opens new tab, which has a 67% share, data from market researcher Trendforce show. Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. Three sources briefed about the matter told Reuters that Tesla (TSLA.O), opens new tab was the customer for the deal. HELP SAMSUNG'S FOUNDRY BUSINESS The deal with Tesla comes as Samsung, which is due to report its earnings on Thursday, faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix (000660.KS), opens new tab. This lag has weighed heavily on its profits and share price. Pak Yuak, an analyst at Kiwoom Securities, said the deal would help reduce losses at Samsung's foundry business, which he estimates exceeded 5 trillion won ($3.6 billion) in the first half of the year. Analysts say Samsung has struggled to retain key clients, with many defecting to TSMC for advanced chips, underscoring technological challenges the firm faces in the race to stay relevant in the capital intensive business. TSMC counts Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Qualcomm (QCOM.O), opens new tab among its customers. It is not clear whether the Samsung-Tesla deal is related to ongoing trade talks between South Korea and the United States. Seoul is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs. ($1 = 1,378.7000 won) Reporting by Heekyong Yang and Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Business * ADAS, AV & Safety * Sustainable & EV Supply Chain

Musk announces Tesla, Samsung Electronics chip supply deal

The big picture: Samsung had announced Saturday that it had struck a $16.5 billion supply agreement, but it didn't name the company. * The announcement comes after Samsung, one of the world's largest memory chip makers acknowledged last year that it had fallen behind in the AI chips war. Driving the news: "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," Musk wrote on his platform X. * "Samsung currently makes AI4. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona," Musk added. * "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house." * Representatives for Samsung did not immediately respond to Axios' late Sunday request for comment. Editor's note: This is a breaking news story. Please check back for updates.

Musk hails $16.5bn Samsung deal to supply Tesla with AI chips

Samsung has agreed a $16.5bn (£12.3bn) deal to manufacture artificial intelligence chips for Tesla, in a move hailed by Elon Musk on Monday. The South Korean tech company announced the contract with an unnamed client in a regulatory filing, with Tesla's chief executive giving further details on his social media platform, X. Musk wrote that Samsung would produce Tesla's next-generation A16 chips at a new plant in Texas. "The strategic importance of this is hard to overstate," he wrote. In December, the Biden administration announced $4.75bn in funding for Samsung's semiconductor manufacturing facilities in Texas under the Chips Act, legislation aimed at making the US more self-sufficient in chip manufacturing. At the time, the then US commerce secretary, Gina Raimondo, said the funding would ensure the country had a "steady stream" of chips essential to AI and national security. In a post of X on Monday, Musk said Samsung had agree to allow Tesla to "assist in maximising manufacturing efficiency" and that he would "walk the [manufacturing] line personally to accelerate the pace of progress". He added that the Samsung plant in Taylor, outside Austin, Texas, was "conveniently located not far from my house". The deal will help re-energise a project faced long delays amid Samsung's difficulties in retaining and attracting big clients. Ryu Young-ho, a senior analyst at Seoul-based NH Investment & Securities, said the Taylor plant "so far had virtually no customers", making the deal "quite meaningful". In October, Reuters reported that Samsung had postponed taking deliveries of chipmaking equipment from ASML, a Dutch manufacturer, for the Texas site as it had not yet won any significant customers for the project. It has already delayed the plant's operational start to 2026. Samsung makes Tesla's AI4 chips, which power the carmaker's full self-driving driver assistant system. Taiwan's TSMC is slated to make the AI5 chips for Tesla, initially in Taiwan and then Arizona, Musk has said. The regulatory filing by Samsung announcing the chip supply agreement did not name the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033.

Elon Musk's Tesla signs €14 billion chip deal with Samsung Electronics

Elon Musk confirmed in a post on X that the South Korean giant's US-based foundry will produce chips used in Tesla's self-driving cars, a record-breaking deal for both Samsung and American chipmaking. A Samsung manufacturing facility in Texas will produce the newest generation of an advanced microchip for its yet-to-be rolled-out cars, Tesla CEO Elon Musk announced in a post on X. "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," Musk said. The deal is a major win for the South Korean tech giant, which lost major clients like Google in recent years to competitors such as the Taiwan Semiconductor Manufacturing Company (TSMC) due to workflow issues and low production yields. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency," Musk continued in the post. "This is a critical point, as I will walk the line personally to accelerate the pace of progress." While Samsung already produces the AI4 and has been working with Tesla since 2017, it lost the AI5 deal to TSMC, who initially produced it in Taiwan and will soon be moving production to a plant in Arizona. According to another post on X, the deal amounts to $16.5 billion (€14 billion), which Musk claims is "just the bare minimum. Actual output is likely to be several times higher". Besides Tesla vehicles, the upcoming AI6 chip is expected to power the technological advancement of Tesla's humanoid robots and will be involved in AI model training. What's so "fab" about the new fab? A fab is a tech industry term for a semiconductor fabrication plant or a cutting-edge factory where companies like Tesla get their custom computer chips built after they are designed. There are only a few tech giants in the world that have the excruciatingly precise machinery to build 2-nanometer (nm) chips, which fit 50 billion transistors on a chip barely the size of a human fingernail. The obsession with miniaturization in the tech world is part of a drive to achieve better computational power and combine it with greater energy efficiency. The South Korean multinational conglomerate has been operating a semiconductor plant in Austin, Texas, since 1996. However, the new AI6 Tesla chip will be produced in a new plant in Taylor, around 50 kilometres away from the original fab. "The fab is conveniently located not far from my house," Musk said in the post. Musk has lived near the launch site of his space exploration company, SpaceX, in Texas since 2021. The Samsung deal is in line with the Chips and Science Act, a US bill passed in 2022, which aims to bring more of the highly profitable semiconductor manufacturing industry to the US, instead of relying on overseas producers.

Samsung to Make Tesla's AI6 Chips at Upcoming Texas Facility | AIM

Samsung Electronics has secured a ₩22.76 trillion (~$16.5 billion) contract to manufacture advanced 2-nanometer semiconductors, according to a regulatory filing by the South Korean tech firm. While Samsung has not officially named Tesla in its filing, it has revealed that the deal is with a "large global company". To follow up, Elon Musk confirmed on X that Samsung's upcoming foundry in Taylor, Texas, will be "dedicated to making Tesla's next-generation AI6 chip", following Samsung's current production of AI4 chips and TSMC's upcoming AI5 chip. "Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency," Musk wrote in another post, stating that he will "walk the line personally to accelerate the pace of progress". The order is the largest ever for Samsung Foundry and reportedly accounts for 7.6% of the company's total revenue in 2024. The company anticipates completing the contract by the end of 2033. Although the Texas foundry is still under construction, the order signals a long-term bet on US-based chip manufacturing. The move is also seen as part of Tesla's vertical integration strategy to secure an in-house AI chip supply for its autonomous driving. Shares of Samsung Electronics have risen to ₩70,000 following the announcement. The deal will provide a significant boost to Samsung's foundry business, which has struggled to compete with TSMC in the advanced node segment.

Tesla and Samsung team up on AI chips

This partnership is a huge vote of confidence in Samsung's advanced chip-making capabilities as it seeks to challenge the dominance of rival TSMC. Elon Musk announced Sunday that Tesla has secured a semiconductor chip supply deal with Samsung Electronics for its AI chips, following Samsung's earlier disclosure of a $16.5 billion supply agreement. Musk stated on X that Samsung's new Texas fabrication plant will produce Tesla's AI6 chip. He noted that Samsung currently manufactures the AI4 chip, while TSMC will produce AI5 chips, initially in Taiwan and later in Arizona, after design completion. Musk also indicated that Samsung will permit Tesla to assist in maximizing manufacturing efficiency at the facility. The announcement follows Samsung's previous acknowledgment of falling behind in the AI chip sector.

Elon Musk says Tesla, Samsung Electronics sign chip supply deal - The Economic Times

Tesla has signed a major chip supply deal with Samsung Electronics, reportedly worth $16.5 billion through 2033. The move aims to support Samsung's struggling contract chip-making business as it faces tough competition from TSMC. Analysts say the deal could reduce losses and strengthen South Korea-U.S. tech ties amid trade talks.Tesla CEO Elon Musk said on Monday that the US automaker has signed a deal to source chips from Samsung Electronics, a move expected to bolster the South Korean tech giant's loss-making contract manufacturing business. On Saturday, Samsung announced a $16.5 billion chip supply deal with a major global company, without naming the client. It said the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. Three sources briefed about the matter told Reuters that Tesla was the customer for the deal. The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix. This lag has weighed heavily on its profits and share price. Samsung, the world's top memory chip maker, also makes logic chips designed by customers through its foundry business. Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung's foundry business, which he estimated exceeded ₩5 trillion ($3.63 billion) in the first half of the year. Analysts say Samsung has struggled with the defection of key clients to TSMC for advanced chips. TSMC counts Apple, Nvidia and Qualcomm among its customers. The Samsung-Tesla deal is also significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs. It is not clear how the order would affect Samsung's plan to start production at its new factory in Texas, which has been delayed as it struggles to win major customers. Samsung is grappling to boost production yields of its latest 2-nanometer technology, and the order is unlikely to involve the cutting-edge tech, Lee Min-hee, an analyst at BNK Investment & Securities, said. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said. ($1 = ₩1,378.7000)

Tesla's Samsung Chip Deal Is "Likely" Worth More Than $16.5 Billion, Says Musk As He Confirms The Affair

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Tesla CEO Elon Musk has confirmed that his firm will use Korean technology giant Samsung's chip manufacturing plant in Taylor, Texas, to produce its next-generation AI chips. Called the AI6, these chips will be manufactured with Tesla's assistance, with Musk adding that he will personally take part in the process to ensure smooth production. Taiwan's TSMC, the world's largest contract chip manufacturer, will make the AI5 chips, initially in Taiwan and then in its Arizona plant, according to Musk. Tesla's deal with Samsung for its AI chips marks a rare win for the South Korean firm, whose foundry division has continued to lag behind TSMC's over the past couple of years. The deal is worth $16.5 billion, according to Bloomberg, and Samsung's shares gained by 2.5% in Korea after the news broke. Musk confirmed the development on X and added that the deal likely worth "much more than" $16.5 billion. According to him Samsung will manufacture Tesla's next-generation AI chips while TSMC will continue with the current generation hardware. The chips currently used in Tesla's cars are the AI3 chips, and the firm believes that the AI5 chips will be its most advanced processors that might also be subject to US export controls. Musk shared a few details about them during Tesla's latest earnings call, where he commented that the chip should "hopefully be in volume production around the end of next year." Hardware upgrades have been a contentious issue on Teslas as cars launched with older chips have struggled to keep up with the latest full self-driving (FSD) assisted driving platform's upgrades. The A15 chips are believed to be essential for autonomous driving, and according to Musk, these chips will be manufactured by Taiwan's TSMC. Confirming Bloomberg's report, Tesla's CEO shared that TSMC will initially make the A15 chips in Taiwan and then in Arizona. These chips "just finished design," according to Musk, with Samsung being responsible for manufacturing the AI4 processors. TSMC's Arizona site is the firm's most advanced manufacturing facility and is currently producing chips on the N4 process technology family. The AI5 chip is believed to be made on the 3-nanometer process technology family, with unconfirmed reports suggesting that the inference computer could perform as many as 2,500 trillion operations per second. Musk added that Samsung will make Tesla's next-generation A16 chips. "The strategic importance of this is hard to overstate," he said, outlining that "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency." Allowing Tesla to assist it with chip production was an important factor in the deal, according to Musk, since not only will he "walk the line personally to accelerate the pace of progress," but "the fab is conveniently located not far from" his house in Texas. Musk has established Texas as his operational base due to its proximity to SpaceX's Boca Chica site, where his rocket company is developing the world's largest rocket, Starship, for interplanetary spaceflight missions.

Musk's Tesla signs $16.5 billion chip supply deal with Samsung

SEOUL -- Tesla CEO Elon Musk said the U.S. automaker had signed a US$16.5 billion deal to source chips from Samsung Electronics, a move expected to bolster the South Korean tech giant's loss-making contract manufacturing business. Samsung shares soared nearly seven per cent after news of the deal on Monday which comes as the world's top memory chip maker faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix. Musk said Samsung's new chip factory in Taylor, Texas will make Tesla's next-generation AI6 chip, potentially re-energizing the project that has faced long delays amid Samsung's difficulties in retaining and attracting major clients. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house," Musk said in a post on X on Monday. "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher," he said in another post. Shares of Samsung jumped 6.8 per cent to their highest since September last year, while Tesla shares were up 1.9 per cent in U.S. pre-market trading. According to a senior analyst at NH Investment & Securities, Ryu Young-ho, Samsung's Taylor fab "so far had virtually no customers, so this order is quite meaningful," although the deal may represent a small portion of its logic chip revenue annually. In October, Reuters reported that Samsung had postponed taking deliveries of ASML chipmaking equipment for its Texas factory as it had not yet won any major customers for the project. It has already delayed the plant's operational start to 2026. It is not clear whether the Samsung-Tesla deal is related to ongoing trade talks between South Korea and the United States. Seoul is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25 per cent U.S. tariffs. A South Korean trade ministry official told Reuters he had not heard that the specific deal was part of the trade negotiations. While no timeline was provided for AI6 chip production, Musk has previously said that next-generation AI5 chips will be produced at the end of 2026, suggesting AI6 would follow. Lee Dong-ju, an analyst at SK Securities, expects production in 2027 or 2028, but Tesla has a history of missing its targets. Samsung currently makes Tesla's AI4 chips, which power its Full Self-Driving driver assistant system, while TSMC is slated to make the AI5, initially in Taiwan and then Arizona, Musk has said. Samsung, the world's top memory chip maker, also produces logic chips designed by customers through its foundry business. The Texas project is central to Samsung Chairman Jay Y. Lee's strategy to expand beyond its bread-and-butter memory chips into contract chip manufacturing. It holds just eight per cent of the global foundry market, far behind industry leader TSMC 2330.TW, which has a 67 per cent share, data from market researcher Trendforce show. Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033. Three sources briefed about the matter told Reuters that Tesla was the customer for the deal. The deal with Tesla comes as Samsung, which is due to report its earnings on Thursday, faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix. This lag has weighed heavily on its profit and share price. Earlier this month, Samsung projected a 56 per cent drop in second-quarter operating profit, partly due to widening losses of its foundry business. Pak Yuak, an analyst at Kiwoom Securities, said the deal would help reduce losses at Samsung's foundry business, which he estimates exceeded 5 trillion won ($3.6 billion) in the first half of the year. Analysts say Samsung has struggled to retain key clients, with many defecting to TSMC for advanced chips, underscoring technological challenges the firm faces in the race to stay relevant in the capital-intensive business. TSMC counts Apple, Nvidia and Qualcomm among its customers.

Samsung Signs $16.5 Billion Deal to Make AI Chips for Tesla in Texas; Shares Rally -- Update

Samsung Electronics will manufacture artificial-intelligence chips for Tesla in Texas under a $16.54 billion multiyear deal, a major win for its U.S. foundry business that sent shares of South Korea's largest company sharply higher. The technology giant said in a regulatory filing Monday that the contract--equivalent to 7.6% of its overall 2024 revenue from businesses including smartphones, televisions and home appliances--will run until the end of 2033. It didn't identify the client, citing a confidentiality agreement that also kept other details under wraps. Tesla Chief Executive Elon Musk confirmed the deal with the Korean company on X, saying that Samsung's new fabrication facilities in Texas will be dedicated to making the U.S. electric-vehicle maker's next-generation AI6 chip. "The strategic importance of this is hard to overstate," he wrote in the post. Samsung currently makes the AI4 chip, and TSMC will make the AI5 chip, Musk said. The AI6 chip is intended to be used in humanoid robots, self-driving cars and AI data centers. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress," Musk said in a subsequent post. Shares in Samsung rose 6.8% on Monday following the news, closing at 70,400 won, equivalent to $50.88--the highest level since last September. The advance outperformed the benchmark Kospi's 0.4% gain and was the stock's sharpest daily increase in more than eight months. The contract win comes as Samsung, the world's largest memory-chip maker, struggles to catch up with Taiwan Semiconductor Manufacturing Co. in the foundry business--making chips on a contract basis for customers such as Nvidia, Qualcomm and Apple, which design chips but don't have their own factories to produce them. Despite years of investment, Samsung has only widened its gap with TSMC. Industry tracker TrendForce, a research firm, estimates that TSMC's share of global foundry revenue increased to 67.6% in the first quarter of 2025 from 67.1% in the previous quarter. Samsung's share fell to 7.7% from 8.1% over the same period. Some analysts say that relative to TSMC, Samsung's foundry business is suffering from lower yields, broadly referring to the number of chips that can be harvested from a wafer. Samsung is also seen to be struggling with slower-than-expected progress in its advanced manufacturing processes and insufficient demand from major customers. The deal with Tesla will likely enable Samsung's new fabrication plant in Taylor, Texas, which is scheduled to begin operating in 2028, to focus on producing chips largely used in AI data centers and robots, according to Samsung Securities analysts led by Lee Jong-wook. Samsung's U.S. foundry business is expected to secure a sizable and sustainable revenue contribution from the deal, the analysts said. "The existing smartphone-centered customer base can be diversified into applications such as data centers and robots," they wrote in a note.

Samsung signs $16.5 bn chip deal with Tesla to revive its foundry business

Samsung has been facing tough competition in the foundry space, especially from rivals like TSMC. Samsung Electronics has secured a $16.5 billion chip supply deal with Tesla, a move that could boost its struggling contract chip manufacturing business. The South Korean tech giant announced the deal over the weekend, saying it had signed a long-term agreement with a major global company but did not reveal the client's name. However, according to Reuters, sources familiar with the matter confirmed that the deal is with Tesla. The contract will run until the end of 2033. This could be a big win for Samsung's foundry business. Despite being one of the world's leading memory chip makers, Samsung has been facing tough competition in the foundry space, especially from rivals like TSMC. The company has lost several high-profile clients to TSMC. "TSMC counts Apple, Nvidia, and Qualcomm among its customers," the report mentioned. Also read: Google makes it easier to use AI Mode on Android, here's how Pak Yuak, an analyst at Kiwoom Securities, estimated that the foundry division has lost more than 5 trillion won (about $3.63 billion) in the first half of this year. It's unclear whether the deal will involve Samsung's latest 2-nanometer chip technology. According to BNK Investment & Securities analyst Lee Min-hee, Samsung is still working on improving the production quality of these chips. The agreement comes at a crucial time as South Korea looks to strengthen ties with the US in key industries like semiconductors and shipbuilding. Also read: Apple iPhone 17 Pro and iPhone 17 Pro Max: Price in India, design, camera and all other leaks So, the Tesla deal marks a significant step for Samsung as it tries to rebuild its presence in the global chip manufacturing market and compete more strongly against its biggest rivals.