Samsung's 2nm Chip Deal with Tesla Validates Competence

Samsung touts its 2nm process node competence through its deal with Tesla to manufacture chips for EVs and supercomputing. The company expects more large orders and plans to increase investment in its Texas fab next year. Samsung also aims to use its 2nm Exynos 2600 processor in the Galaxy S26 series. The chip business contributed only 400 billion won to Samsung's operating profit, down 6.1 trillion won on-year.

Samsung Electronics Co. Ltd. (SSNLF) has been making waves in the semiconductor industry with its recent deal with Tesla Inc. (TSLA) to manufacture AI6 chips for electric vehicles (EVs) and supercomputing. The South Korean tech giant expects this partnership to bring in more large orders and plans to increase investment in its Texas foundry next year. Additionally, Samsung aims to utilize its 2nm Exynos 2600 processor in the upcoming Galaxy S26 series, further solidifying its position in the chip market.

The AI6 chip deal, valued at $16.5 billion, has Samsung's shares declining by 2.54% initially, but they recovered to 70,400 won ($50.62) [2]. This agreement marks a significant milestone for Samsung's foundry business, which currently holds 8% of the global market share compared to TSMC's 67% [2]. The deal allows Tesla to gain foundry experience and pivot away from potential geopolitical tensions with TSMC, while Samsung benefits from a substantial order that could break TSMC's iron grip on modern chip production processes [1].

Samsung's 2nm GAA fabrication process has seen improvements, with yields increasing from initial paltry numbers to around 40% [1]. The company expects to hit the necessary 60% or above yield at the Taylor foundry once new equipment is installed next year. The Exynos 2600, which will be the first smartphone chip built on Samsung Foundry's 2nm GAA process, is expected to be announced before the launch of the Galaxy S26 series [3]. This processor could potentially outperform Qualcomm's Snapdragon 8 Elite and Apple's A-series chips, marking a significant step forward for Samsung in the competitive smartphone market.

The chip business contributed only 400 billion won to Samsung's operating profit, down 6.1 trillion won on-year. However, the deal with Tesla and the upcoming Galaxy S26 series could provide a much-needed boost to Samsung's semiconductor revenue. The company's ability to manufacture 2nm chips for both high-end smartphones and critical components for EVs and supercomputing positions Samsung as a key player in the global foundry market.

References:
[1] https://www.notebookcheck.net/Tesla-AI6-chip-on-Samsung-2nm-process-may-first-go-to-Optimus-and-Dojo-not-cars.1073204.0.html
[2] https://www.benzinga.com/markets/equities/25/07/46678117/samsung-electronics-shares-fall-2-54-following-teslas-16-5-billion-ai-chip-manufacturing-agreement
[3] https://www.phonearena.com/news/galaxy-s26-could-be-the-first-with-a-2nm-chip-if-exynos-2600-delivers_id172781