Samsung’s landmark $16.5 billion chipmaking deal with Tesla is emerging as a pivotal moment for the South Korean tech conglomerate, testing both its technical capabilities and its willingness to undergo a deep cultural transformation amid ongoing struggles in its semiconductor division.
As reported by the Financial Times, the eight-year agreement will see Samsung manufacture Tesla’s next-generation AI6 chip at its new fabrication facility in Taylor City, Texas. The chip is expected to power Tesla’s AI systems for video-based training, including its ambitious humanoid robot project, Optimus, and its planned robotaxi fleet.
Industry watchers see the deal as a potential catalyst for Samsung’s beleaguered foundry division, which has faced declining fortunes in recent years. Once a leader in global chip manufacturing, Samsung’s foundry market share has dwindled to just 7.7% in the first quarter of 2025, according to TrendForce, far behind Taiwan Semiconductor Manufacturing Company (TSMC), which dominates with a 67.6% share.
“This deal with Tesla could restore confidence in Samsung’s technology,” said Lee Jong-hwan, a professor of semiconductor engineering at Sangmyung University, in an interview with the Financial Times. “But it is critical that Samsung doesn’t repeat the mistakes of the past.”
Those mistakes include production delays, poor yield rates, and the inability to reliably deliver promised volumes—factors that cost Samsung major clients like Apple in the mid-2010s. More recently, Samsung’s Taylor plant faced criticism from analysts at Macquarie, who warned it risked becoming a “stranded asset” due to a lack of large-scale orders.
The Tesla partnership, however, could reverse that trajectory. Insiders told the Financial Times that the long-term contract may create a “virtuous cycle” of higher utilization, better yields, and increased client confidence. Still, experts caution that the agreement alone will not elevate Samsung to the level of TSMC, whose Arizona facility already counts Apple and Nvidia among its clients.
“Elon [Musk] is a demanding customer, and this partnership could force Samsung to become much more customer- and engineer-focused,” said Peter Lee, a semiconductor analyst at Citigroup. “That shift is essential if it wants to compete with TSMC in advanced chipmaking.”
Despite Tesla’s previous reliance on TSMC—its current-generation AI5 chips are produced by the Taiwanese firm—supply constraints at TSMC’s Arizona facility may have opened the door for Samsung. Sources familiar with Tesla’s thinking suggested the company was actively seeking to diversify its supplier base and may have considered investing directly in Samsung’s Taylor plant to secure influence and capacity.
“Elon at one point was considering having Tesla invest directly into the fabrication plant,” said one source. “He’s serious about personally overseeing the production lines to speed up development.”
However, analysts like Dylan Patel of SemiAnalysis remain skeptical. “The length of the contract gives Tesla plenty of opportunities to walk away if Samsung can’t deliver,” he said, noting that issues with advanced manufacturing processes remain a significant hurdle for the Korean firm.
While the Tesla deal is a much-needed win, insiders and industry experts agree that Samsung must implement broader changes to its corporate structure and mindset—especially if it aims to consistently attract high-profile clients in the AI era.
With its back against the wall and its memory chip business under pressure, Samsung’s future in advanced chipmaking may hinge on its success with Tesla. But as the Financial Times highlights, this is only the beginning of a long and challenging road toward regaining industry leadership.
