Tesla and Samsung Electronics have signed an agreement whereby Samsung will supply $16.5 billion worth of chips to the American car manufacturer. The collaboration focuses on the development and production of Tesla’s next generation of AI chips.
The project is an important step for Samsung to revitalize its foundry division, which has been losing money for some time. This was reported by Reuters and CNBC, among others, in separate articles.
The chips will be produced at Samsung’s new factory in Texas. This location will be specifically used for the production of Tesla’s AI6 chip, which is part of the company’s future Full Self-Driving technology.
Although there is no exact start date for the production of the AI6 chip, Musk previously announced that production of the A15 chip will start at the end of 2026. It is likely that the AI6 will follow. Samsung already produces Tesla’s A14 chip, while the AI5 chip is being produced by TSMC, first in Taiwan and later in Arizona.
The deal could help restart Samsung’s project in Taylor, Texas, which has been delayed and failed to attract major customers.
New hope for foundry division
With this move, Samsung is trying to breathe new life into its foundry business. This division, which manufactures chips for external customers, is strategically important to the company, especially now that its market share is being significantly outpaced by competitor TSMC. The latter has a considerably larger share of the global market for contract chip manufacturing.
The collaboration with Tesla should help Samsung increase its market share and reduce losses. According to analysts, the company suffered a loss of more than 5 trillion won in its foundry division in the first half of this year. The gap with rivals such as TSMC and SK Hynix, especially in the field of AI chips, has weighed heavily on Samsung’s performance.
It is still unclear whether the deal is related to broader trade talks between South Korea and the United States. What is certain is that Samsung is under increasing pressure to strengthen its position in the chip industry amid technological challenges and fierce competition from market leaders such as TSMC.