Will Tesla deal revitalise Samsung’s chip foundry business?

• Deal offers Samsung the chance to reshape industry perceptions and move out from TSMC’s long shadow.
• Samsung’s foundry business will need to string together more wins, consistently improve yields, mitigate engineering hiccups, and woo additional customers in sectors from automotive to AI accelerators.

When the Tesla-Samsung blockbuster deal first caught my eye, I couldn’t help but dive into the ripples it’s creating across the tech world.

The $16.5 billion partnership isn’t just a headline—it’s a potential game-changer for Samsung’s foundry ambitions, which, let’s be honest, have been stuck in the shadow of industry heavyweight TSMC for far too long.

To set the stage: Samsung’s foundry business has long tried to claw its way up, pouring billions into R&D and next-generation chip technology. Yet the simple truth is, profit has been elusive. Most major clients still look to TSMC when it’s time to roll out cutting-edge chips at scale.

Tesla CEO Elon Musk said that Samsung’s new chip factory in Taylor, Texas would make Tesla’s next-generation AI6 chip.

Samsung currently makes Tesla’s AI4 chips, which power its Full Self-Driving (FSD) driver assistant system, while TSMC is slated to make the AI5, initially in Taiwan and then Arizona, Musk has said

It holds just 8 per cent of the global foundry market, far behind TSMC, which has a 67 per cent share, according to data from market researcher Trendforce.

A badge of credibility

Despite its size and innovations, Samsung’s foundry arm has often played catch-up, struggling with inconsistent yields and the uphill battle of convincing big tech players to switch allegiances.

But here comes Tesla—a customer with not just deep pockets, but also a relentless vision for self-driving vehicles and AI-powered infotainment.

Landing Tesla as a flagship client delivers Samsung more than revenue; it’s a badge of credibility. In an industry ruled by trust, reliability, and bleeding-edge technology, having Tesla onboard sends tech companies and investors a strong, clear signal: Samsung can deliver, even on the most demanding projects.

Let’s talk competition. While TSMC remains the dominant force, this deal plants a flag for Samsung, showing it’s determined to fight for a bigger slice of the pie. Tech giants like Apple, NVIDIA, and Qualcomm have traditionally shied away from Samsung’s foundry—often due to concerns around yield, delays, or simply comfort with TSMC’s track record.

A giant leap forward

But the Tesla contract opens the door for Samsung to retell its story: as a foundry that’s not only investing heavily but delivering for world-class, forward-thinking partners.

Will this single deal guarantee long-term profitability? No—one big fish doesn’t make an ecosystem. Samsung’s foundry business will need to string together more wins, consistently improve yields, mitigate engineering hiccups, and woo additional customers in sectors from automotive to AI accelerators.

The Tesla contract, though, is a giant leap forward: proof that the tide may be turning. With renewed industry respect, more doors could open, reviving not just balance sheets, but the very reputation Samsung has chased for years.

If you ask me, the real significance of this deal lies beyond the numbers. It offers Samsung the chance to reshape industry perceptions and move out from TSMC’s long shadow. The foundry war is far from over, but for the first time in a while, Samsung’s fighting with renewed fire—and the whole industry is watching.