Mirror Review
July 28, 2025
Summary:
- Samsung Electronics has secured a $16.5 billion contract to produce and supply semiconductor chips for Tesla.
- The deal, which runs until the end of 2033, is a significant boost for Samsung’s contract chip manufacturing division, which has been losing market share to competitors.
- While Samsung did not officially name its partner, citing a confidentiality agreement, Tesla CEO Elon Musk and other sources confirmed Tesla is the client.
Why would Tesla commit to a nearly $17 billion chip deal that runs until 2033?
The answer lies in Tesla’s ambition to become more than a carmaker—it’s evolving into an AI-driven tech platform. And for that, it needs fast, efficient, and stable chip fabrication at scale.
Why Tesla Needs Samsung Technologies
1. Chips Are the Heart of Tesla’s Tech Ambitions
Tesla’s roadmap is clear:
- AI-powered Full Self-Driving (FSD)
- The Dojo supercomputer for training neural nets
- The Optimus robot
Each of these requires custom-designed, high-performance chips, and Samsung’s foundry provides the scale and expertise to bring them to life.
A decade-long partnership ensures Tesla won’t scramble for supply as it builds out its next-gen products.
2. The Deal Signals Confidence in Samsung’s 2nm Tech
The deal is widely seen as a vote of confidence in Samsung’s 2-nanometer chip fabrication, which enables smaller, faster, and more power-efficient chips.
As Bloomberg Intelligence noted, the contract “implies a recovery in Samsung’s 2-nanometer generation chip production.”
Even if initial chips aren’t built on 2nm, Tesla is clearly banking on Samsung’s roadmap maturing over the next few years.
3. TSMC’s Overbooked—and Tesla Needs Capacity
With Taiwan Semiconductor Manufacturing Company (TSMC) holding 67.6% of the global foundry market, companies like Apple, Nvidia, and Qualcomm already take up most of its capacity.
Samsung, despite its market share slipping to 7.7%, offers availability, flexibility, and willingness to strike long-term deals—a perfect fit for Tesla’s needs.
4. It’s About Predictability and Production Control
Tesla’s chip requirements aren’t one-time—they’re ongoing.
This $16.5 billion Tesla-Samsung deal, running through 2033, provides predictable supply and production control without building its own fabrication.
That’s a smart strategy—allowing Tesla to stay lean while locking in fabrication capabilities through Samsung.
5. Samsung Needs Tesla Just as Much
Samsung’s foundry business has been under pressure, posting losses of over $3.6 billion in just the first half of this year.
Key clients like Qualcomm and Nvidia have shifted to TSMC. Tesla stepping in is a lifeline that could help boost foundry sales by 10% annually, according to analysts.
“This will help reduce losses at Samsung’s foundry business,” said Pak Yuak, analyst at Kiwoom Securities.
6. A Strategic Alliance in the AI Chip Race
The chip war isn’t just about cars—it’s about AI dominance. While SK Hynix leads in high-bandwidth memory (HBM) chips used in AI, Samsung has fallen behind.
This Tesla deal keeps Samsung rooted with a major American innovator, therefore opening doors to other fabless AI startups that need manufacturing partners.
7. Supply Chain Resilience in a Volatile World
Geopolitical tensions make Taiwan (home to TSMC) a riskier bet.
Tesla’s partnership with Samsung, headquartered in South Korea and expanding in Texas, will help it diversify its chip supply chain.
As global EV and AI competition heats up, secure, flexible partnerships like this one could be the difference between leading and lagging.
A Win-Win (If Execution Follows Vision)
The Tesla–Samsung chip deal is not just about hardware; it’s about strategy, survival, and scaling. For Tesla, it’s a critical decision to support its transformation into an AI-first company.
For Samsung, it’s a chance to regain footing in a market dominated by TSMC and SK Hynix.
Importantly, the success of this partnership will depend on:
- How fast Samsung improves 2nm yields
- Whether the foundry can deliver at scale
- Tesla’s ability to integrate these chips into its evolving hardware platforms
Final Word
In a tech-driven future, custom silicon is the new competitive edge.
Tesla needs Samsung Technologies now more than ever—not just to build smarter EVs, but to stay ahead in the global AI and robotics race.
This deal isn’t just a semiconductor company contract. It’s a long-term bet on who will build the brainpower behind tomorrow’s machines.
