Seoul: Samsung Electronics Co. announced on Monday that it has secured a monumental 22.8 trillion-won (US$16.4 billion) order to supply artificial intelligence (AI) semiconductors. Although the South Korean tech giant initially kept the client's identity confidential, U.S. tech giant Tesla later confirmed the deal and hinted at a potential expansion.
According to Yonhap News Agency, Samsung disclosed in a regulatory filing that it has signed a foundry contract to be completed by December 31, 2033. The deal represents a significant 7.6 percent of Samsung Electronics' total revenue of 300.9 trillion won from the previous year, marking it as the largest chip order ever secured by the company.
Tesla's founder, Elon Musk, later revealed on social media that Samsung Electronics will produce Tesla's next-generation AI6 chip at its new semiconductor plant in Texas. Musk also suggested that the agreement might exceed the initial amount disclosed by Samsung.
"Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency," Musk stated in a post on X. "Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate."
The Texas facility, part of Samsung's US$37 billion investment plan, is expected to begin operations in 2026. Musk highlighted that Samsung Electronics is currently producing AI4 chips, while Taiwan Semiconductor Manufacturing Co. (TSMC) will manufacture Tesla's AI5 chips first in Taiwan and subsequently in Arizona.
Tesla is accelerating the development of its full self-driving (FSD) assistance system, employing the AI4, AI5, and AI6 chips. Musk emphasized the strategic significance of the Texas plant, noting its proximity to his residence.
This significant order is anticipated to bolster Samsung's foundry division, which has struggled to compete with global leader TSMC. Recent data from market research firm TrendForce indicates that Samsung Electronics accounted for 7.7 percent of the global foundry market in the first quarter, lagging behind TSMC's 67.7 percent.
In its recent earnings guideline, Samsung Electronics estimated an operating profit of 4.59 trillion won and sales of 74 trillion won for the second quarter. The operating profit fell short of market expectations, largely due to underperformance in the foundry and System Large Scale Integration (LSI) divisions.
Following the announcement of the deal, Samsung Electronics' shares increased by 6.83 percent, closing at 70,400 won, significantly outperforming the Korea Composite Stock Price Index's 0.42 percent gain.