Tesla, Samsung sign major semiconductor agreement

July 28, 2025 (MLN): Samsung Electronics has signed a massive $16.5 billion semiconductor supply agreement with Tesla, marking a pivotal moment for both tech giants.

The South Korean chipmaker disclosed the deal in a regulatory filing, initially withholding Tesla's name as the counterparty due to confidentiality requests.

However, Tesla CEO Elon Musk confirmed the automaker’s involvement via posts on X (formerly Twitter).

According to the filing, the contract’s effective start date is July 26, 2024, based on receipt of orders, and will run through December 31, 2033.

Samsung noted in the document that due to confidentiality, key terms, including the buyer’s identity, will remain undisclosed until the end of the contract period.

Despite Samsung’s reserved stance, Musk broke the silence on X, stating: “Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip”.

He further mentioned that the strategic importance of this is hard to overstate.

He added that Samsung currently manufactures the AI4 chip, while TSMC is slated to handle the upcoming AI5 generation, with initial production in Taiwan followed by Arizona.

Highlighting Tesla’s role in the process, Musk said: “Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency”.

This is a critical point, as I will walk the line personally to accelerate the pace of progress, he noted.

He also hinted the deal’s true value might exceed the publicly announced figure.

Before Musk's confirmation, industry experts and media reports, including Bloomberg, had speculated Tesla as the likely customer.

Ray Wang, director at The Futurum Group, had told CNBC that Tesla seemed to be the probable client.

Samsung, the world’s second-largest provider of foundry services after Taiwan Semiconductor Manufacturing Company (TSMC), specializes in fabricating chips based on external designs.

The company aims to begin 2-nanometer chip mass production soon and is actively seeking major orders for the next-gen technology.

Smaller nanometer designs translate to more efficient and powerful chips, critical for AI applications, as CNBC reported.

Local reports also indicate that Qualcomm may order chips based on Samsung’s 2nm process.

Despite this strategic win, Samsung has faced setbacks.

 Analysts expect its Q2 profit to drop more than 50%, attributed to weak foundry orders and lagging AI memory chip demand.

Samsung trails rivals SK Hynix and Micron in high-bandwidth memory (HBM) chips, which are vital for AI chipsets.

SK Hynix currently leads the HBM space and supplies Nvidia, the U.S.-based AI chip leader.

Although Samsung has been working to certify its latest HBM chips with Nvidia, reports suggest delays have pushed certification timelines to at least September.

Nonetheless, the landmark Tesla deal has already boosted investor confidence, Samsung’s shares jumped 5% on Monday following the announcement.

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