Samsung Electronics Co. will manufacture semiconductors for Tesla Inc. in the new 16.5 billion dollar agreement. The deal marks a major boost for the world’s leading memory chipmaker amid efforts to revive its struggling semiconductor division.
South Korea's biggest organization reported that it has reached a 22.8 trillion won fabricating contract with an international organization, which is expected to continue till the end of 2033. That customer is Tesla, reports claim, since the vehicle maker already has a business with Samsung contract chip making unit.
Samsung’s Seoul-traded shares rose as much as 3.5 percent, the largest one-day increase in nearly four weeks.
The win of the contract comes at a time when Samsung has been steadily losing its chip making grounds. With a home-grown memory chip business along with a foundry business it takes orders as a service provider to customers including Apple, the company has struggled to attract sufficient orders to use its foundry to the full.
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This is said to be in contrast to leading chipmaker Taiwan Semiconductor Manufacturing Co., which still cannot meet all demand. TSMC held a dominant share of 67.6 percent of the global foundry market in the first quarter this year, according to Taipei-based Trend Force. Samsung’s share slipped to 7.7 percent from 8.1 percent in the previous quarter.
Samsung Electronics’ contract to supply semiconductors to an unidentified large global corporation implies a recovery in its foundry business’ 2-nanometer generation chip production. The 16.5 billion dollar contract spans 2025-33 and could boost Samsung’s foundry sales by 10 percent annually, we calculate. It could also lead to new contracts with other fables chip companies.
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Samsung and TSMC is both on pace to deliver the next generation of semiconductor advancement, moving to 2-nanometer fabrication, and the new deal is seen as a signal of confidence for the company’s upcoming fabrication technology.