Elon Musk says Tesla, Samsung sign $21 billion chip supply deal
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Samsung shares rose more than 4 per cent after the news.
PHOTO: AFP
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SEOUL - Tesla chief executive Elon Musk said the US automaker has signed a US$16.5 billion (S$21 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 rallied to close 6.8 per cent higher 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,” Mr Musk said in a post on X on July 28.
If Mr 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 maximising 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,” Mr Musk said on his social media platform.
Samsung had earlier announced the US$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.
The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as Taiwan Semiconductor Manufacturing Company (TSMC) and SK Hynix.
This lag has weighed heavily on its profits and share price.
Samsung, the world’s top memory chipmaker, also makes logic chips designed by customers through its foundry business.
Kiwoom Securities analyst Pak Yuak said the latest deal would help reduce losses at Samsung’s foundry business, which he estimated exceeded five trillion won (S$4.6 billion) in the first half of 2025.
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.
The Samsung-Tesla deal may also be significant for South Korea, which is seeking US partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25 per cent US tariffs.
Samsung is grappling to boost production yields of its latest 2-nanometre technology, but the order is unlikely to involve the cutting-edge tech, said BNK Investment & Securities Lee Min-hee. REUTERS
