Samsung Hits $165 Billion Chip Jackpot with Tesla Partnership, Eyes Growth in U.S. Market

Following the announcement of a significant $165 billion chip agreement with Tesla, Samsung Electronics Chairman made his way to Washington. This visit highlights Samsung's proactive advancements in its semiconductor business, aiming to ensure strategic alignment with global trends and perhaps securing further opportunities in the U.S. market.

The recent deal with Tesla marks a substantial financial engagement, expected to invigorate Samsung's struggling foundry business. Tesla CEO Elon Musk confirmed the partnership on X, indicating that Samsung's new factory in Texas would manufacture Tesla's next-generation AI6 chips. The strategic importance of this development is evident, providing Samsung with a chance to establish a significant foothold in the North American semiconductor industry.

Musk noted that the proximity of the Texas site to his residence enables convenient oversight, assisting in optimizing production efficiency. His direct involvement underscores the critical nature of this project, emphasizing a tightened collaboration between the tech giants. Samsung had previously cited confidentiality requested by the unnamed client, ensuring that transaction details remain undisclosed for now.

The deal arrives at a time when Samsung faces mounting pressure to enhance its AI chip production, where it trails behind competitors like TSMC and SK Hynix. These rivals have increasingly dominated the advanced chip market, impacting Samsung's profitability and share value. Nonetheless, the partnership with Tesla injects a fresh dynamic that could catalyze growth within Samsung's foundry operations.

Pak Yuak from Kiwoom Securities suggests that the agreement may mitigate Samsung's foundry losses, which were estimated to exceed 5 trillion Korean won in the first half of the year. At this juncture, the collaboration is crucial for Samsung as it navigates competitive waters in semiconductor technology, particularly with TSMC's established relationships with major clients including Apple, NVIDIA, and Qualcomm.

Lee Min-hee from BNK Investment & Securities shares a cautious perspective regarding Samsung's ability to deliver cutting-edge technology like the 2-nanometer node for Tesla. Samsung's ongoing struggle in the foundry sector against TSMC accentuates the challenge of mastering advanced chip manufacturing techniques needed to attract more tech-driven clientele.