Musk says Tesla, Samsung Electronics sign chip supply deal
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Musk says Tesla, Samsung Electronics sign $16.5 billion chip supply deal
Tesla CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics. The move is expected to bolster the South Korean tech giant’s loss-making contract manufacturing business. Samsung shares rose more than 4% after the news. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia. The deal could revive the project that has faced delays amid Samsung’s struggles to retain and win major customers, analysts say. The South Korean firm is seeking U.s. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% tariffs.
Item 1 of 2 A Tesla Cybercab is displayed at the Los Angeles Auto Show, in Los Angeles, California, U.S., November 21, 2024. REUTERS/David Swanson/File Photo
Summary
Companies Samsung shares jump more than 4% after news of deal
Musk says Samsung’s new Texas fab will make Tesla’s AI6 chip
Samsung struggles with AI chip competition, losing market share to TSMC
SEOUL, July 28 (Reuters) – Tesla (TSLA.O) , opens new tab CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics (005930.KS) , opens new tab , a move expected to bolster the South Korean tech giant’s loss-making contract manufacturing business.
Samsung shares rose more than 4% after the news.
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“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,” Musk said in a post on X on Monday.
If Musk was referring to Samsung’s upcoming Taylor, Texas, plant, the deal could revive the project that has faced delays amid Samsung’s struggles to retain and win major customers.
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” Musk said on his social media platform.
Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033.
Three sources briefed about the matter told Reuters that Tesla (TSLA.O) , opens new tab was the customer for the deal.
Samsung, the world’s top memory chip maker, also makes logic chips designed by customers through its foundry business.
Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung’s foundry business, which he estimated exceeded 5 trillion won ($3.63 billion) in the first half of the year.
The Samsung-Tesla deal may also be significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs
Samsung is grappling to boost production yields of its latest 2-nanometer technology, but the order is unlikely to involve the cutting-edge tech, said Lee Min-hee, an analyst at BNK Investment & Securities.
Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said.
($1 = 1,378.7000 won)
Reporting by Heekyong Yang and Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar
Our Standards: The Thomson Reuters Trust Principles. , opens new tab
Musk says Tesla, Samsung Electronics sign $16.5 billion chip supply deal
Tesla CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics. The move is expected to bolster the South Korean tech giant’s loss-making contract manufacturing business. Samsung shares rose more than 4% after the news. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia. The deal could revive the project that has faced delays amid Samsung’s struggles to retain and win major customers, analysts say. The South Korean firm is seeking U.s. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% tariffs.
Item 1 of 2 A Tesla Cybercab is displayed at the Los Angeles Auto Show, in Los Angeles, California, U.S., November 21, 2024. REUTERS/David Swanson/File Photo
Summary
Companies Samsung shares jump more than 4% after news of deal
Musk says Samsung’s new Texas fab will make Tesla’s AI6 chip
Samsung struggles with AI chip competition, losing market share to TSMC
SEOUL, July 28 (Reuters) – Tesla (TSLA.O) , opens new tab CEO Elon Musk said the U.S. automaker had signed a $16.5 billion deal to source chips from Samsung Electronics (005930.KS) , opens new tab , a move expected to bolster the South Korean tech giant’s loss-making contract manufacturing business.
Samsung shares rose more than 4% after the news.
Sign up here.
“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,” Musk said in a post on X on Monday.
If Musk was referring to Samsung’s upcoming Taylor, Texas, plant, the deal could revive the project that has faced delays amid Samsung’s struggles to retain and win major customers.
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” Musk said on his social media platform.
Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033.
Three sources briefed about the matter told Reuters that Tesla (TSLA.O) , opens new tab was the customer for the deal.
Samsung, the world’s top memory chip maker, also makes logic chips designed by customers through its foundry business.
Pak Yuak, an analyst at Kiwoom Securities, said the latest deal would help reduce losses at Samsung’s foundry business, which he estimated exceeded 5 trillion won ($3.63 billion) in the first half of the year.
The Samsung-Tesla deal may also be significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs
Samsung is grappling to boost production yields of its latest 2-nanometer technology, but the order is unlikely to involve the cutting-edge tech, said Lee Min-hee, an analyst at BNK Investment & Securities.
Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia, analysts said.
($1 = 1,378.7000 won)
Reporting by Heekyong Yang and Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Additional reporting by Jihoon Lee; Editing by Ed Davies and Himani Sarkar
Our Standards: The Thomson Reuters Trust Principles. , opens new tab