Seoul: Samsung Electronics Co. announced on Monday that it has secured a 22.8 trillion-won (US$16.4 billion) contract to supply artificial intelligence semiconductors to a major client, later identified as Tesla. The deal represents a significant 7.6 percent of Samsung's total revenue from the previous year and marks the largest chip order ever secured by the South Korean tech giant. The contract is set to be completed by December 31, 2033.
According to Yonhap News Agency, Samsung initially did not disclose the identity of the customer or specifics of the contract due to "management confidentiality." However, later in the day, Tesla CEO Elon Musk revealed via his social media account that Samsung will manufacture Tesla's next-generation AI6 chips at its upcoming semiconductor plant in Texas.
The new Texas facility, part of Samsung's US$37 billion investment strategy, is expected to commence operations in 2026, despite previous delays caused by a lack of customers. Musk highlighted the collaboration's strategic importance and noted that Samsung's current production includes AI4 chips, while Taiwan Semiconductor Manufacturing Co. (TSMC) will handle the production of Tesla's AI5 chips.
This significant contract is anticipated to bolster Samsung's foundry division, which has faced challenges in competing with TSMC, the global industry leader. Recent data from market research firm TrendForce indicates that Samsung holds a 7.7 percent share in the global foundry market, compared to TSMC's 67.7 percent.
In its recent earnings guidance, Samsung projected an operating profit of 4.59 trillion won and sales of 74 trillion won for the second quarter. The company's operating profit fell short of market expectations, primarily due to underperformance in the foundry and System Large Scale Integration (LSI) divisions.
Following the announcement of the Tesla contract, Samsung Electronics' shares surged by 5.61 percent to 69,600 won, significantly outperforming the broader KOSPI's 0.20 percent gain.