Samsung to produce Tesla chips in $16.5 billion multi-year deal

Samsung to produce Tesla chips in $16.5 billion multi-year deal

Samsung Electronics has signed a $16.5 billion contract to supply chips to a major global corporation, likely Tesla, for its Full Self-Driving (FSD) chips. The deal, announced on July 28, 2025, will run through December 31, 2033 [1]. This contract is a significant win for Samsung Foundry, which has been struggling to compete with TSMC in the semiconductor market [2].

The agreement, signed on Saturday, involves contract chip manufacturing, with details of the counterpart and terms to be disclosed at the end of 2033. The deal comes as Samsung faces challenges in the AI chip market, where it has been losing market share to TSMC [1]. Samsung's customers include Tesla and Qualcomm, while TSMC supplies chips to Apple and Nvidia [1].

The contract is expected to boost Samsung's foundry business, which has been grappling with technological challenges. Samsung is also seeking U.S. partnerships in chips and shipbuilding to avoid potential 25% U.S. tariffs [1]. The deal may affect Samsung's plan to start production at its new factory in Texas, which has been delayed due to the lack of major customers [1].

The $16.5 billion contract is a significant milestone for Samsung, strengthening its position against TSMC amid growing demand for advanced automotive chips in the electric vehicle market [2]. Tesla's increasing need for FSD chips, along with orders for NVIDIA's new custom Tegra T239 SoC for Nintendo's Switch 2, underscores the growing importance of advanced semiconductor technology in the automotive and gaming industries.

References:
[1] Reuters. (2025, July 28). Samsung signs $16.5 billion chip supply deal, shares rise 3.5%. Retrieved from https://www.reuters.com/business/samsung-elec-signs-165-billion-deal-make-chips-global-firm-2025-07-28/
[2] Tweaktown. (2025, July 28). Samsung signs $16.5 billion foundry contract lasting to 2033, rumored to be for Tesla FSD chips. Retrieved from https://www.tweaktown.com/news/106671/samsung-signs-16-5-billion-foundry-contract-lasting-to-2033-rumored-be-for-tesla-fsd-chips/index.html