Investor confidence as Samsung's $16.5 billion Tesla chip deal sparks hope

On Monday, Samsung Electronics announced a $16.5 billion deal with Tesla to supply semiconductor chips for the EV maker. The agreement has reignited new hopes among investors. It comes just a year after Jun Young-hyun, who was brought in as the head of the semiconductor business in hopes of restoring the company’s technological edge.  

Samsung’s stock, SSNLF, has jumped approximately 10% since Monday’s announcement to a high of KRW ₩73700.00. The South Korean semiconductor company’s July gains are over 20%, recording its best month in a long time.

The South Korean Electronics and consumer appliances company mainly accounted for more than half of the South Korean stock index Kospi’s July gains, showing positive investor confidence in the chip maker. The Kospi index has recorded a 0.55% upward move since the announcement.

Samsung stock jumps ~10% following the partnership deal 

Samsung develops its own memory chips and semiconductor materials for clients. The company struggled to fill market demand from customers like Apple Inc., which eventually left, rendering its high-bandwidth memory (HBM) off the market.

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.

Samsung currently makes AI4.

TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.

— Elon Musk (@elonmusk) July 28, 2025

The South Korean chip maker decided to replace its head of semiconductor business last year. Memory guru Jun Young-Hyun was brought in to restore the company’s technological edge. He brought in Margaret Han, a former Intel Corp. and TSMC executive, as the head of the U.S division. 

According to a Citigroup analyst interviewed by Bloomberg, if implemented successfully, Samsung’s $16.5 billion deal with Tesla could open up its prospects of generating more external customers. Its U.S. division will be able to utilize its facility in Taylor, Texas, which has been dormant due to construction delays. 

Science Act and the 2022 Chips bills, which form the U.S. bid to rebuild its semiconductor industry, will support consumer appliances and electronics companies in expanding their production to Taylor, Texas. The American government has invested billions in subsidies and tax incentives for companies like Intel to rebuild its semiconductor front.   

Samsung’s partnership with Tesla could add $50 billion to its market value

A Bloomberg report said that Morgan Stanley’s analysts Shawn Kim and Michelle Kim forecast that Samsung’s collaboration with Tesla could add more than $50 billion to its market value. Gary Tan, portfolio manager at Allspring Global Investments in Singapore, revealed that the A16 chip announcement confirmed the South Korean company’s advancements at the U.S. fab, a remarkable endorsement amid Intel’s struggles in domestic manufacturing. 

The South Korean semiconductor company will hold its Q2 earnings meeting on Thursday, from which investors expect to gain more insight into the deal’s details. At the beginning of July, the company revealed that its preliminary operating profit fell sharply than expected by 56% following the tariff wars and the U.S. fight on AI chips with China. The Q2 earnings meeting will also show whether Samsung will benefit from Nvidia’s resumed sales of H20 AI chips to China.

Nvidia has been given permission to restart the supply of H20 AI chips to China and a new Chinese version of the RTX chips, both of which Samsung supplies.  It has also provided HBM3 to pair with H20 chips.

Tan revealed that Nvidia’s latest AI chips would allow the semiconductor company to regain stability in advanced memory. JPMorgan Chase & Co. revealed in its July 8 report that investors have grown interested in its comeback in high-bandwidth memory. 

Some analysts have warned that the semiconductor company stock could be overpriced, and investors should be more cautious in the short term. The technical indicators show that Samsung is trading at overheated levels, and the common consensus targets reveal a minimal upside in more than four years.

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