Samsung signed a $16.5 billion chip deal, likely with Tesla

On Monday, Samsung Electronics disclosed it signed a $16.5 billion contract to deliver semiconductors to a major international firm. In a brief regulatory filing, the South Korean tech giant disclosed that the agreement took effect on July 26, 2025, and will run until December 31, 2033.

While Samsung did not identify the client or share specific details of the technologies involved, multiple sources familiar with the matter told media outlets that Elon Musk’s Tesla is the company behind the deal.

Samsung says it intended to protect trade secrets

Samsung Electronics said it would disclose the agreement’s details, including the counterparty and terms, only at the end of 2033. The company explained in its regulatory filing that this decision was made “to protect trade secrets” at the request of its counterpart. 

The tech firm even cautioned its investors, stating: “Since the main contents of the contract have not been disclosed due to the need to maintain business confidentiality, investors are advised to invest carefully, considering the possibility of changes or termination of the contract.” 

While the company declined to confirm the client’s identity, a source familiar with the deal said the contract was signed with Tesla. While Samsung has not publicly commented on Tesla, its foundry unit already supplies the automaker, and the new deal is expected to strengthen that partnership.

Other industry insiders say that the South Korean tech giant signed with Qualcomm. Earlier this year, Han Jin-man, who leads Samsung Foundry, held meetings with Tesla and Qualcomm during a US visit, prompting speculation that this deal is linked to those talks.

So far, Samsung shares have jumped 3.5% in early trading, their biggest intraday gain in almost four weeks.

The company is still the world’s second-largest foundry service provider, trailing only Taiwan Semiconductor Manufacturing Co. However, TSMC maintains a considerable lead over Samsung. According to Taipei-based TrendForce, TSMC controlled 67.6% of the global foundry market in Q1, while Samsung’s share fell to 7.7% from 8.1% in the previous quarter.

Samsung’s chip demand plummeted in the second quarter of the year

This recent deal provides a significant boost for Samsung, which has faced setbacks in chip manufacturing.

For the June quarter, the tech firm saw its operating income tumble 56%, blaming it on inventory write-offs caused by US limits on AI chip shipments to China. The company reported an operating profit of 4.6 trillion won, equal to about $3.3 billion in the June quarter, its weakest performance since 2023, falling way short of market forecasts. It only accrued about 74 trillion won in revenue, approximately $53 billion.

Usage rates for its chips also dwindled, driven partly by the uncertainty created by Trump’s erratic trade policies.

Even so, analysts hope that Samsung will be able to rebound during the year’s second half. Sanjeev Rana, head of research at CLSA Securities Korea, said this was likely the lowest for the company in 2025, adding that the chipmaker will see a “sequential recovery in the coming months.”

Samsung also expects operating losses in its contract chipmaking division to narrow as demand gradually picks up during the second half.

Furthermore, Bloomberg Intelligence projects that the $16.5 billion chip deal could boost the company’s foundry revenue by 10% annually. Analysts anticipate the tech firm will secure more contracts from other fabless chip firms. According to Digital Daily, the deal may account for nearly 8% of Samsung’s total revenue in 2024, making it the company’s largest foundry order to date

So far, the tech firm has added chip manufacturing specialists to its Texas plant, slated to start mass production in 2026, a move seen as an effort to accelerate construction at the Taylor site and draw in more US clients. According to reports, the firm’s new 2nm Exynos 2600 chip, expected to launch in 2026, is already in the prototype mass production phase.

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