Samsung Secures $16.5 Billion Multiyear Deal to Manufacture Chips for Tesla

Samsung Electronics has reportedly secured a semiconductor manufacturing deal worth $16.5 billion, significantly boosting its contract chipmaking business. While the company has officially stated the deal is with a "global corporation," sources familiar with the matter confirm the customer is Tesla Inc.. This long-term agreement is seen as a major win for Samsung’s underperforming foundry division.

Multiyear Contract to Run Through 2033

In a regulatory filing on Monday, Samsung announced a 22.8 trillion won (approx. $16.5 billion) deal that will extend through the end of 2033. Although Samsung has not publicly named Tesla as the client, a person familiar with the deal—who requested anonymity due to the sensitive nature of the agreement—identified Tesla as the buyer.

The deal is expected to involve the production of advanced semiconductors, which could be used in Tesla’s next-generation electric vehicles, Full Self-Driving (FSD) computers, and AI-driven hardware.

Boost for Samsung's Foundry Business

The agreement offers much-needed momentum for Samsung’s foundry division, which has struggled in recent years to match the pace of Taiwan Semiconductor Manufacturing Company (TSMC). Samsung, the world’s largest memory chip producer, also operates a foundry business that fabricates semiconductors for external clients. However, underutilization of its foundry capacity has been a persistent issue.

In contrast, TSMC continues to dominate the contract chip manufacturing space, with demand consistently outpacing supply.

Market Impact: Samsung Shares See Strongest Surge in Weeks

Following the announcement, Samsung’s Seoul-listed shares surged up to 3.5%, marking their biggest intraday gain in nearly four weeks. This reflects investor optimism around the long-term benefits of the new contract, particularly as Samsung competes to regain its edge in the global semiconductor industry.

A Samsung spokesperson declined to comment on the specifics of the agreement or confirm Tesla as the customer. Similarly, Tesla representatives did not respond to media inquiries.

Foundry Market Share Gap Widens Between Samsung and TSMC

According to data from Taipei-based TrendForce, TSMC held 67.6% of the global foundry market in Q1 2025. In comparison, Samsung’s share fell to 7.7%, down from 8.1% in the previous quarter. This significant gap illustrates the competitive pressure Samsung faces, especially in attracting new clients and delivering on cutting-edge fabrication technologies.

The Tesla deal could serve as a turning point for Samsung’s contract chipmaking business, helping the company prove its capabilities and secure more high-profile customers in the future.

Tesla and Samsung’s Ongoing Collaboration

Tesla has previously collaborated with Samsung’s foundry division, making the renewal and expansion of the partnership a logical progression. The companies have reportedly worked on custom chips for Tesla’s Autopilot and FSD platforms, with Samsung providing both fabrication and packaging services.

The new multiyear agreement may involve even more advanced chipsets, leveraging Samsung’s progress in 4nm and 3nm manufacturing technologies to support Tesla’s increasingly sophisticated in-car computing systems.

Strategic Implications for Both Companies

For Samsung:

• Validates its capabilities in high-performance chip manufacturing

• Bolsters its credibility amid competition with TSMC and Intel Foundry

• Could attract more clients looking for alternatives to TSMC

For Tesla:

• Enhances its control over the chip supply chain

• Supports long-term goals in autonomous driving, AI integration, and in-house hardware development

• Reduces dependency on existing semiconductor suppliers during global supply chain volatility

Conclusion: A High-Stakes Deal That Reshapes the Foundry Landscape

Samsung’s reported $16.5 billion deal with Tesla is more than a business win—it’s a strategic lifeline for its struggling foundry division and a sign of growing US-South Korea tech collaboration. If successful, this partnership could narrow the performance and market share gap between Samsung and TSMC, reshaping the global semiconductor manufacturing landscape in the years to come.