In a landmark development that could redefine the electric vehicle (EV) chipmaking landscape, Samsung Electronics has reportedly signed a $16.5 billion (22.8 trillion won) chipmaking deal with Tesla, according to sources close to the matter cited by Bloomberg. Although Samsung has remained tight-lipped about the client’s name, insiders confirm that Tesla is the key player behind this long-term agreement, which will extend through 2033.
This strategic deal not only strengthens Tesla’s technological infrastructure but also delivers a much-needed boost to Samsung’s struggling chip foundry division. While Samsung has always been a titan in memory chip manufacturing, its foundry business — which focuses on producing custom chips for clients — has lagged behind global leader TSMC (Taiwan Semiconductor Manufacturing Company).
A Game-Changer for Samsung’s Foundry Ambitions
The timing of this deal couldn’t be more critical for Samsung. Despite massive investments and technological advancements, Samsung Foundry has been losing ground, with its global market share dipping to 7.7% in Q1 2025, according to research firm TrendForce. In comparison, TSMC commands a staggering 67.6%, driven by high-profile clients such as Apple and NVIDIA.
But now, this Tesla agreement is seen as a potential turning point.
“This long-term contract reflects strong confidence in our future chip technology and manufacturing roadmap,” a Samsung executive said, although declining to mention Tesla directly.
Stock Market Reacts Positively
Investors welcomed the news with open arms. Samsung’s shares rose by 3.5% on the Seoul Stock Exchange on Monday — the company’s biggest single-day jump in nearly a month. Market analysts suggest this spike reflects optimism not just about the deal itself, but also about Samsung’s larger efforts to reclaim its foothold in the global foundry sector.
What’s in It for Tesla?
For Tesla, the decision to deepen ties with Samsung aligns with its increasing demand for custom-built semiconductors. The electric carmaker is doubling down on autonomous driving, enhanced battery systems, next-gen infotainment, and AI-based vehicle diagnostics — all of which require advanced, power-efficient chips.
Samsung is already a chip supplier for Tesla, but this expanded contract signals a broader strategy. Tesla appears to be preparing for a future where nearly every vehicle component is driven by in-house or highly customized silicon.
The Race to 2-Nanometer Technology
Both Samsung and TSMC are neck-and-neck in the race to mass-produce 2-nanometre chips, which are expected to revolutionize high-performance computing and mobility. These next-gen chips will be integral for AI processing, real-time vehicle communication, energy optimization, and autonomous systems — core pillars of Tesla’s roadmap.
Tesla’s partnership with Samsung suggests a bet on not just current technology but on the future of nano-scale innovation.
David vs Goliath: Can Samsung Challenge TSMC?
The Tesla deal gives Samsung a rare opportunity to eat into TSMC’s market dominance. With such a high-value client and a multi-year production plan, Samsung gains the financial security and operational clarity needed to expand its manufacturing capabilities and attract other clients.
Yet, challenges remain. TSMC’s technical maturity, vast client portfolio, and early dominance in 2nm and 3nm technologies make it a formidable competitor. Samsung’s next big test will be mass production quality, yield rates, and execution speed — all crucial for maintaining client trust.
A Defining Moment for the Semiconductor and EV Industries
This isn’t just a business transaction. The $16.5 billion Samsung-Tesla chip deal marks a pivotal moment in the global semiconductor narrative — and perhaps the start of a new chapter in the EV revolution.
As demand surges for smarter, safer, and more autonomous vehicles, semiconductors are emerging as the engine of innovation. With this long-term agreement, Samsung not only gains a marquee client but also a chance to reclaim relevance in the highly competitive chipmaking industry.
For Tesla, it’s a bold move that ensures control, customization, and the technical horsepower to drive the next generation of electric vehicles into the future.
