Tesla Taps Samsung for $16.5 Billion Chip Supply Deal Through 2033

Samsung Electronics Co., South Korea’s tech giant, is making a strategic comeback in the global semiconductor market with a major chip production deal. The company announced it has secured a 22.8 trillion won (approx. $16.5 billion) agreement with a major international client to manufacture semiconductors through the end of 2033.

While the official name wasn't disclosed, sources familiar with the matter confirmed that the client is none other than Tesla Inc., Elon Musk’s electric vehicle empire.

This development marks a critical boost for Samsung’s underperforming foundry division, which has been trailing behind industry leader Taiwan Semiconductor Manufacturing Co. (TSMC) in terms of global market share and technological leadership.

Samsung’s Deal with Tesla: A Strategic Win

Multiyear Contract and Scope

The agreement spans 2025 to 2033, and according to Masahiro Wakasugi and Takumi Okano, “Samsung Electronics’ contract to supply semiconductors to an unidentified large global corporation implies a recovery in its foundry business’s 2-nanometer generation chip production. The $16.5 billion contract spans 2025-33 and could boost Samsung’s foundry sales by 10% annually, we calculate. It could also lead to new contracts with other fabless chip companies.”

This substantial contract will not only bring consistent revenue over nearly a decade but may also restore confidence in Samsung’s ability to execute next-generation fabrication technologies.

Samsung's Foundry Struggles and Market Share

Despite being a major player in memory chips, Samsung has found it challenging to attract enough clients for its foundry business, which manufactures semiconductors on behalf of others. Its market share slipped to 7.7% in Q1 2025, down from 8.1% in the previous quarter, according to research firm TrendForce.

Meanwhile, TSMC remains the dominant player with a commanding 67.6% global foundry market share and is struggling to meet increasing demand.

2nm Chip Fabrication: The Future of Semiconductors

The new deal also signals strong confidence in Samsung’s upcoming 2-nanometer chip technology. Both Samsung and TSMC are racing to lead the next wave of semiconductor innovation, and this long-term contract is a vote of trust in Samsung’s readiness for the future.

Stock Market Reaction

The announcement drove Samsung’s Seoul-listed shares up by as much as 3.5%, marking their biggest intraday surge in nearly four weeks. This indicates strong investor optimism about the company’s renewed growth trajectory in chip manufacturing.

Despite this bullish response, Samsung representatives declined to comment specifically on Tesla being the client, and Tesla has not yet officially confirmed its involvement in the agreement.

Conclusion

Samsung's reported $16.5 billion chipmaking deal with Tesla marks a significant turning point for its underperforming foundry business. The multiyear contract positions the company to regain momentum in the race for 2nm chip leadership and secure a more competitive edge against industry leader TSMC.

This partnership is also a strategic step for Tesla, which seeks reliable suppliers for advanced semiconductors to power its AI, infotainment systems, and autonomous driving platforms. While the full details remain undisclosed publicly, the agreement is likely to act as a catalyst for Samsung’s technological and commercial revival in chip fabrication.

With global semiconductor demand expected to continue its upward trend, this deal not only strengthens Samsung’s standing but also signals a shift in industry dynamics.