Samsung Strikes AI Chip Deal with Tesla; Shares Surge 7%
The AI6 chip will replace the current AI4 system and serve as the foundational hardware for Tesla’s autonomous driving technology.
Quick overview
- Samsung has entered a $16.5 billion agreement with Tesla to manufacture next-generation AI6 semiconductors through 2033.
- The chips will be produced in Taylor, Texas, and are expected to enhance Tesla's autonomous driving technology.
- Following the announcement, Samsung's shares rose by 7%, while Tesla's shares increased by 3.7%.
- Despite this strategic move, analysts indicate that Samsung's foundry division is still facing challenges and operates at a loss.
South Korean tech giant Samsung announced on Monday a landmark $16.5 billion (₩22.8 trillion) agreement with Tesla to manufacture next-generation AI6 semiconductors through 2033.
The chips will be produced at a plant in Taylor, Texas, according to Tesla CEO Elon Musk, who confirmed the news on his social media platform X following a Bloomberg report.
The announcement sent Samsung shares soaring by 7%, while Soulbrain, a key material supplier for Samsung, jumped 16% on the Korea Exchange (KRX). Tesla shares rose 3.7% on Wall Street.
“It’s hard to overstate the strategic importance of this,” Musk posted, describing the contract’s value as “the bare minimum,” and suggesting that actual production “will be several times higher.”
The AI6 chip will replace the current AI4 system and serve as the foundational hardware for Tesla’s autonomous driving technology in the years ahead, marking a major step toward true self-driving capabilities.
Samsung Challenges TSMC’s Market Dominance
With this move, Samsung aims to bolster its position in the global foundry market, currently dominated by Taiwan Semiconductor Manufacturing Company (TSMC), which held a 67.6% market share in Q1. In contrast, Samsung’s share edged up to 8.1%, up from 7.7% the previous quarter.
However, analysts note that Samsung’s foundry division still operates at a loss. According to Vey-Sern Ling, Managing Director at Union Bancaire Privée in Singapore, “Samsung’s foundry business continues to struggle with underutilization.”
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