Samsung inks $16.5 billion deal to manufacture chips for a global firm

Samsung Electronics has signed a $16.5 billion deal to supply chips for an unidentified major global company. The latest announcement has sent its shares soaring up 3.5%. The South Korean tech giant said the deal signed was for contract chip manufacturing.

The latest announcement has sent the shares of the South Korean giant soaring up 3.5%.

The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix. This lag has weighed heavily on its profits and share price.

Though the details of the agreement including the terms were not to be disclosed until the contract is completed at the end of 2033, Tesla CEO Elon Musk later said that the U.S. automaker has signed this deal with Samsung.

The strategic importance of this is hard to overstate,” Musk said in the 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 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.

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.