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Shares of Samsung Electronics (KS:005930) fell about 1% on Tuesday, pausing after a strong rally sparked by news of a $16.5 billion chip supply deal with Tesla (NASDAQ:TSLA). The agreement positions Samsung as a key supplier for Tesla’s next-generation AI6 chip, to be produced at Samsung’s new facility in Taylor, Texas.
The announcement, made by Tesla CEO Elon Musk on Sunday, boosted Samsung’s stock in the previous session as investors reacted positively to the company’s growing role in the electric vehicle and AI chip markets. The AI6 chip is expected to play a critical role in Tesla’s upcoming autonomous driving technologies, although production timelines remain undisclosed.
Analysts say the deal could provide much-needed momentum to Samsung’s contract chip manufacturing (foundry) business, which has struggled with profitability amid intense competition from TSMC and other rivals. However, they caution that Samsung faces challenges in expanding its customer base beyond Tesla, as major tech and automotive firms typically lock in long-term supply agreements.
The partnership also comes at a time of heightened geopolitical and trade tensions. Vietnam, where Samsung operates key factories, faces a 46% U.S. tariff imposed under President Donald Trump, part of broader tariffs affecting several Southeast Asian nations. These trade dynamics could impact supply chains and margins for Samsung’s global operations.
Despite Tuesday’s slight decline, market watchers note that the Tesla deal reinforces Samsung’s ambition to secure a stronger foothold in the AI-driven automotive sector, a market projected to grow significantly over the next decade.
The move signals a pivotal shift for Samsung’s foundry division, as it seeks to challenge industry leaders and capture new opportunities in AI chips and electric vehicle components.
