Tesla signs $16.5B chip supply deal with Samsung
What's the story
Tesla has signed a major chip supply deal with Samsung Electronics, worth an estimated $16.5 billion through 2033. The agreement will bolster Samsung's struggling contract chip-making business in the face of tough competition. Analysts believe that this partnership could not only help reduce losses for Samsung but also strengthen tech ties between South Korea and the US amid ongoing trade talks.
Business impact
Deal comes as a major relief for Samsung
The deal, which was confirmed by Tesla CEO Elon Musk on Monday, is expected to provide much-needed support to Samsung's foundry business. The South Korean tech giant is under pressure in the artificial intelligence chip production race, trailing competitors such as TSMC and SK Hynix. The competitive pressure in this sector has severely impacted its profits and share price. The deal is expected to cut down losses at Samsung's foundry business, which reportedly exceeded $3.6 billion in H1 2025.
Geopolitical implications
South Korea is looking for US partnerships in chips
The Samsung-Tesla deal is also a major step for South Korea, which is looking for US partnerships in chips and shipbuilding. This comes amid last-ditch efforts to reach a trade agreement that could eliminate or reduce potential 25% US tariffs. The deal's impact on Samsung's plan to start production at its new Texas factory remains unclear, considering it has been delayed due to difficulties in securing major customers.