Elon Musk, the CEO of Tesla, said that the US automaker has agreed to pay $16.5 billion to source semiconductors from Samsung Electronics. This agreement is anticipated to support the South Korean tech giant’s struggling contract manufacturing division.
As the world’s leading memory chip manufacturer faces increasing pressure to build artificial intelligence chips, where it lags behind competitors like TSMC and SK Hynix, Samsung shares surged about 7% on news of the deal on Monday.
According to Musk, Samsung’s new chip facility in Taylor, Texas will produce Tesla’s next-generation AI6 processor, which might revitalize the project after it has been delayed for a long time due to Samsung’s struggles to draw in and keep big customers.
The $16.5 billion figure is the absolute minimum. In a different article, he stated that the actual production would probably be several times greater. In US pre-market trade, Tesla shares were up 1.9%, while Samsung shares surged 6.8% to their highest level since September of last year.
Samsung’s Taylor factory “so far had virtually no customers, so this order is quite meaningful,” said to Ryu Young-ho, a senior analyst at NH Investment & Securities, even though the agreement could only account for a small percentage of the company’s yearly logic chip sales.
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