he Deal:
- Samsung Electronics signed a $16.5 billion contract to supply AI6 chips to Tesla
- Chips will be made at Samsung’s Taylor, Texas factory
- Intended use: self-driving cars, humanoid robots, data centers
- Tesla CEO Elon Musk confirmed the partnership Sunday
Market Reaction:
- Samsung shares fell over 2% on Tuesday morning, recovered to flat by midday
- Underperformed South Korea’s broader market, which rose 0.6%
Analyst Takeaways:
- Deal is a positive step for Samsung’s struggling foundry business
- Still faces challenges:
- Low yields on cutting-edge chips at Texas plant
- Delayed shipments of high-bandwidth memory (HBM) chips to Nvidia
- Tough competition from TSMC (logic chips) and SK Hynix (memory)
- Low yields on cutting-edge chips at Texas plant
Expert Commentary:
- Ben Barringer, Quilter Cheviot:
“This deal could mark a turning point, but Samsung must also fix its memory business.” - Russ Mould, AJ Bell:
“Samsung may have had to accept Tesla’s terms to prove its contract manufacturing capabilities.” - Matt Britzman, Hargreaves Lansdown:
“It’s a long-term deal; we won’t see the chips in cars for at least a year or two.”
Strategic Importance:
- Boosts Samsung’s visibility in AI chip manufacturing
- Producing chips in the U.S. reduces risks from tariffs and supply chain disruptions
Samsung still needs to prove reliability and scalability to attract more big clients