Monday, July 28, 2025
By Kamal Swami
Tesla, Samsung Sign Major Chip Supply Agreement
Tesla CEO Elon Musk on Monday confirmed that Tesla has signed a chip supply agreement with South Korea’s Samsung Electronics. It is speculated that this venture will significantly support Samsung’s struggling contract chip manufacturing division. The announcement from Tesla came after Samsung’s Saturday disclosure of a $16.5 billion deal with an unnamed global customer. The deal will continue till the end of 2033. However, the Korean electronics company didn’t disclose the name of the global customer. However, according to sources related to the project, the buyer is Tesla.
The contract is considered a booster dose for Samsung, which has been facing tough times in the semiconductor sector, particularly in the manufacturing of high-performance chips for artificial intelligence. The Korea-based company is facing tough competition from Taiwan’s TSMC and local competitor SK Hynix — a disadvantage that has impacted both profits and share performance.
Samsung is the largest maker of memory chips throughout the world and operates a foundry business that produces logic chips designed by external clients. Industry experts believe that the deal with Tesla is a much-needed boost. The deal also carries geopolitical advantages. South Korea is looking to strengthen its relations with the U.S. in critical industries such as semiconductors and shipbuilding. According to experts, the agreement will potentially help South Korea in ongoing negotiations aimed at avoiding a proposed 25% U.S. tariff on key exports.
It remains unclear whether the Tesla order will impact Samsung’s delayed production schedule at its new Texas facility, which has yet to commence operations amid challenges in securing major clients. According to Lee Min-hee, an analyst at BNK Investment & Securities, the deal with Tesla will not include Samsung’s most advanced 2-nanometer chip technology, which is still in development and facing yield issues.
Although the deal with Tesla will help Samsung in regaining confidence in its chip capabilities, analysts warn that sustained recovery will depend on overcoming technological challenges and regaining lost market share in cutting-edge chip production.
