Samsung Electronics, the world’s largest memory chip maker, has reportedly secured a major contract with Tesla Inc, a leading US battery electric vehicle manufacturer, for the supply of next-generation AutoPilot “AI6” chipsets. The deal, valued at US$16.5 billion over eight years, marks a significant milestone for Samsung’s foundry business.
Although Samsung did not disclose the name of the client in its regulatory filing, Tesla’s CEO, Elon Musk, confirmed the partnership on his platform, X. Musk stated that Samsung’s new fab in Texas will be dedicated to producing Tesla’s AI6 chip, emphasizing the strategic importance of the collaboration.
The agreement with Tesla is expected to provide a much-needed boost to Samsung’s foundry business, which has faced tough competition from global rival TSMC. Samsung has been constructing a new fab in Taylor, Texas, with an investment of US$18 billion since 2022. However, completion has been delayed due to a lack of orders. The deal with Tesla is anticipated to help Samsung complete the project, which is now slated to be operational by 2026.
Following the news of the contract, Samsung’s share price surged by almost 7%. The company, however, cautioned investors to proceed with caution, as the full details of the agreement have not been disclosed for confidentiality reasons. Investors are advised to consider the possibility of changes or termination of the contract before making any investment decisions.
In conclusion, the partnership between Samsung and Tesla represents a significant milestone in the automotive industry, showcasing the importance of cutting-edge technology in the development of electric vehicles. With Samsung’s advanced chipset technology and Tesla’s innovative approach to AI, the collaboration is poised to drive future advancements in the automotive sector.
