Tesla and Samsung Sign $16.5 Billion Chip Supply Deal

Tesla has signed a $16.5 billion deal with Samsung to supply chips, a move that should strengthen Samsung's activities. The deal will support Tesla's new factory in Texas, which will produce AI6 chips. Samsung's shares have risen 6% following the news. The agreement should revitalize Samsung's project, which has faced delays due to difficulties in maintaining and winning important clients.

Tesla has inked a significant $16.5 billion agreement with Samsung Electronics to source next-generation AI6 chips, a move that is expected to bolster both companies' operations. The deal, which runs through the end of 2033, represents a strategic partnership that will see Samsung's upcoming fabrication plant in Taylor, Texas, dedicated to producing Tesla's AI6 chips [1][2].

The agreement is particularly notable for Samsung, which has been facing challenges in retaining major clients and producing advanced artificial intelligence chips. The deal is expected to reduce losses in Samsung's foundry business, which has been struggling to secure high-profile clients [1]. The Texas location of the plant is also seen as strategically beneficial for Tesla, with CEO Elon Musk stating that the fab is conveniently located not far from his house [2].

The deal comes at a crucial time for Samsung, which has been under pressure to develop advanced AI chips and is seeking U.S. partnerships in chips and shipbuilding to mitigate potential 25% U.S. tariffs. The order, however, is unlikely to involve cutting-edge 2-nanometer technology, but it is seen as a significant step towards revitalizing Samsung's foundry operations [1][3].

Following the announcement, Samsung's shares surged by as much as 6%, reflecting investor confidence in the deal's potential to stabilize revenue and enhance market share against competitors like TSMC [2]. This latest agreement could mark a turning point for Samsung, helping to reduce financial strain on its foundry business and signaling a vote of confidence in its progress towards next-generation semiconductor manufacturing.

References:
[1] https://www.financialexpress.com/auto/car-news/tesla-samsung-sign-16-5-billion-deal-for-chip-supply/3928631/
[2] https://www.fortuneindia.com/technology/samsung-signs-165-bn-chip-deal-with-tesla-to-supply-next-gen-ai6-chip/125242
[3] https://www.freepressjournal.in/business/samsung-electronics-signs-165-billion-contract-to-supply-semiconductors-who-is-the-counterparty