The landmark contract marks a critical turnaround for Samsung’s foundry unit, which has suffered deep losses and struggled to compete with global leader TSMC in AI chip production. The Taylor plant, now re-energized by Tesla’s involvement, could emerge as a cornerstone of Samsung’s U.S. ambitions and help restore investor confidence in its non memory chip division.
Samsung’s logic chip business has faced challenges in recent years, holding only 8% of global foundry market share, compared to TSMC’s 67%, according to TrendForce.
The new Tesla contract offers a lifeline. “So far, the Taylor plant had virtually no major clients,” said Ryu Young ho, senior analyst at NH Investment & Securities. “This order is quite meaningful, even if it represents a small share of revenue annually.”
Samsung’s stock price ended the day up 6.83% on Monday in Seoul. Analysts predict that the Tesla agreement will decrease foundry losses, which were reportedly over ₩5 trillion ($3.6 billion) during the first half of 2025. Although the AI6 chip’s production may still be several years off, the announcement indicates strategic significance. Samsung is presently producing AI4 chips for Tesla’s Full Self-Driving (FSD) technology. TSMC is set to manufacture AI5 chips, while AI6 will be the most advanced iteration yet, designed for Tesla’s robotaxis and Optimus humanoid robots.
The Taylor fab was previously criticized for its delays, with Reuters reporting last October that Samsung had postponed receiving ASML chipmaking equipment due to a lack of major customers. Musk’s announcement suggests the tide has turned.
“Samsung agreed to let Tesla help maximize manufacturing efficiency,” Musk posted on X (formerly Twitter).
“I will walk the line personally to accelerate progress. The fab is conveniently near my house.”
The AI6 chip is expected to support real-time AI inference, enabling Tesla’s self-driving systems to make faster and more complex decisions. Musk hinted that $16.5 billion was the “bare minimum,” stating that “actual output could be several times higher.”
Despite Tesla’s stock rising 4.2% following the news, analysts are cautious about its near-term impact. According to Reuters, the deal is unlikely to help Tesla resolve its ongoing EV sales decline or robotaxi rollout delays.
Tesla is currently battling multiple headwinds: a second straight quarter of falling EV sales, expiry of tax credits, and heightened political scrutiny around its close ties to former President Trump. These pressures are compounding concerns about Tesla’s long-term growth outside of its vehicle segment.
Still, Musk remains bullish. He stated during Tesla’s Q2 earnings call that AI5 chips will begin volume production by late 2026, and analysts predict AI6 could follow in 2027 or 2028, though Musk’s timelines have historically slipped.
Samsung’s momentum in AI chips may be bolstered further by ongoing discussions with other tech giants. Reports from Techi.com indicate that Samsung is actively pursuing AI hardware partnerships with Alphabet, with early talks hinting at co-developing chips for Google’s next-generation cloud and edge inference systems.
This marks a renewed strategy for Samsung, which aims to move beyond memory and become a key enabler of the AI-driven economy. Its success will depend not only on delivering for Tesla but also on diversifying its foundry client base.
The Tesla Samsung deal also carries geopolitical weight. As Seoul and Washington negotiate to avoid a 25% U.S. tariff on Korean goods, this chip partnership could act as a diplomatic olive branch. South Korea’s Ministry of Trade has not confirmed the deal’s inclusion in talks, but analysts say it strengthens the case for deepened U.S. Korea supply chain cooperation.
“With the U.S. seeking domestic chip resilience, Tesla’s support for Samsung’s Texas fab gives both sides political leverage,” noted Pak Yuak, an analyst at Kiwoom Securities.
Tesla’s capital allocation continues to draw attention, especially after the company sold 75% of its Bitcoin holdings earlier this year. According to reports, the divestment was aimed at freeing up liquidity for AI-related investments, including chip procurement, data center expansion, and robotaxi testing. Musk has consistently emphasized that “AI is Tesla’s future”, and the Samsung deal appears to affirm that long-term vision, even if the financial payoff takes years to materialize.
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