Samsung Electronics has entered into a massive $16.5 billion chipmaking deal with Tesla, marking a long-term partnership that will extend until 2033, according to a Bloomberg report.
This strategic deal comes as a major breakthrough for Samsung’s foundry business, which has been facing stiff competition and underutilisation.
Although Samsung officially confirmed signing the contract with a global client, the company did not name Tesla. However, sources familiar with the matter confirmed that Tesla is indeed the client, aiming to expand its chip usage for next-gen electric vehicles and AI-powered technologies.
A Much-Needed Boost for Samsung’s Struggling Foundry Unit
While Samsung is a leader in memory chips, its foundry business — responsible for producing chips for other companies — has struggled to keep up with demand and competition.
Samsung has been unable to attract sufficient orders to fully utilise its production capacity.
In contrast, TSMC (Taiwan Semiconductor Manufacturing Company) holds a dominant position in the global market with a 67.6% share in Q1 of this year, while Samsung’s share declined to 7.7%.
The Tesla deal signals a renewed confidence in Samsung’s chip technology and could help the company narrow the gap with TSMC in the coming years.
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Stock Market Reacts Positively to Tesla Partnership
The news had an immediate impact on investor sentiment.
Samsung’s shares surged by 3.5% on the Seoul stock exchange on Monday, marking their biggest single-day jump in almost a month.
This spike highlights the market’s optimism around the Tesla partnership and its potential impact on Samsung’s chip ambitions.
Custom Chips to Drive Tesla’s Next-Gen Electric Vehicles
Tesla is known for integrating advanced semiconductor technology into its electric vehicles, enabling features like autonomous driving, battery management, and infotainment systems.
This deal suggests Tesla is planning to scale up its use of custom chips across its upcoming vehicle models.
Both Samsung and TSMC are working on 2-nanometre chip technology, which will play a critical role in AI, electric mobility, and high-performance computing in the future.
The Tesla-Samsung partnership reflects a shared vision for innovation in electric vehicles and smart mobility.
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