Samsung strikes $16.5B semiconductor deal with Tesla
Samsung lands a decade-long contract to produce cutting-edge semiconductors for Tesla, signalling renewed confidence in its 2nm tech and reigniting its race with TSMC in the global chip arena.
The South Korean tech giant, Samsung Electronics, has secured a $16.5 billion deal to manufacture semiconductors for Tesla Inc., signalling a potential revival for its ailing foundry division.
The long-term agreement, slated to extend through 2033, was confirmed on Monday, 28 July and highlights rising confidence in Samsung’s cutting-edge chip technology, especially its 2-nanometer production line.
Although Samsung declined to name Tesla as the client, insiders familiar with the deal identified the electric vehicle leader as the buyer.
News of the pact propelled Samsung’s shares upward by 3.5%, its sharpest intraday rise in nearly a month; a clear indicator of investor optimism following a lull in the semiconductor foundry sector.
In recent quarters, Samsung has grappled to hold its ground in the cutthroat chip manufacturing market, seeing its global foundry share dip to 7.7% from 8.1%.
By contrast, market leader Taiwan Semiconductor Manufacturing Co. (TSMC) commands a 67.6% share, operating at full capacity, while Samsung struggles to fill its production lines, straining its foundry revenue.
Analysts estimate the Tesla deal could lift Samsung’s foundry sales by 10% annually, injecting fresh vigour into a faltering business segment.
Furthermore, this breakthrough may pave the way for new contracts with other fabless chipmakers, broadening Samsung’s client portfolio and securing steady growth in an unsteady industry.
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