Samsung Electronics has secured a significant $16.5 billion multiyear deal to manufacture semiconductors for Tesla Inc., marking a substantial win for its foundry business. The agreement, which extends through the end of 2033, was initially announced by Samsung without naming the client, but Tesla CEO Elon Musk later confirmed his company as the customer. This strategic partnership is expected to provide a crucial boost to Samsung's chipmaking division, which has faced recent challenges.
The South Korean tech giant's foundry unit has been under pressure, struggling with underutilized capacity and losing market share to competitors like Taiwan Semiconductor Manufacturing Co. (TSMC). While TSMC held a dominant 67.6% share of the global foundry market in the first quarter of this year, Samsung's share slipped to 7.7%. Analysts estimate Samsung's foundry business recorded losses exceeding 5 trillion won ($3.6 billion) in the first half of 2025, making this contract a potential turning point.
For Tesla, the deal ensures a secure supply of critical components for its advanced automotive technology. Samsung will produce Tesla's next-generation AI6 chip, which is essential for the electric vehicle maker's ongoing development in artificial intelligence and full self-driving capabilities. This agreement de-risks Tesla's supply chain for these high-performance chips through the next decade.
Elon Musk confirmed the deal on X, stating that Samsung's new chip factory in Taylor, Texas, will be dedicated to making the AI6 chip. Musk also emphasized his personal commitment to the partnership, noting, > "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." He further added that the factory's proximity to his home was convenient.
The contract is one of the largest single-client orders for Samsung's foundry business and is projected to boost its annual foundry sales by 10%. Industry experts suggest that this high-profile collaboration could also help Samsung attract other major clients, strengthening its competitive position in the global semiconductor manufacturing landscape. Samsung's shares soared nearly 7% following the news of the deal.