Tesla confirms long-term chip supply deal with Samsung

Tesla CEO Elon Musk on Monday confirmed that the electric vehicle giant has partnered with Samsung Electronics in a long-term chip supply agreement—potentially giving Samsung’s foundry division a significant boost amid intensifying global chip competition.

Just days earlier, Samsung had announced it had signed a $16.5 billion chip production contract with a major global client, without naming the buyer. The deal, which extends through 2033, includes strict confidentiality terms requested by the customer.

According to a Reuters report citing three sources with direct knowledge, Tesla is indeed the unnamed client behind the deal.

The timing is notable. Samsung’s contract chip manufacturing business has been facing mounting pressure, falling behind TSMC and SK Hynix in the race to deliver AI-centric chips, a gap that has already taken a toll on the company’s earnings and market valuation.

While Samsung is globally dominant in memory chips, its foundry division—which produces tailor-made logic chips for third parties—has been struggling to hold onto major clients. The exodus of firms like Apple, Nvidia, and Qualcomm to rival TSMC has only worsened the challenge.

However, industry watchers see the Tesla deal as a step in the right direction. Pak Yuak, analyst at Kiwoom Securities, estimated that Samsung’s foundry arm had racked up losses exceeding 5 trillion won (~$3.63 billion) in just the first half of the year. The new partnership, he says, could help offset some of those losses.

Beyond its commercial value, the agreement also carries strategic geopolitical weight. South Korea is currently deepening ties with the United States, particularly in the semiconductor and shipbuilding sectors, as part of its effort to mitigate the threat of potential 25% U.S. tariffs on key exports

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