Samsung, 16.5 billion chip deal with Tesla. The geopolitical impact
Multi-year agreement for the supply of semiconductors. Production at a new plant in Taylor, Texas, with estimated start-up in 2026
3' min read
Key points
3' min read
Away from Taiwan. Tesla has chosen Korean electronics giant Samsung as its partner for the production of next-generation microprocessors for its future vehicle technology systems. The agreement, worth USD 16.5 billion and valid until 2033, provides for the chips to be manufactured at Samsung's new plant in Taylor, Texas (Tesla is based in Austin), which is nearing completion and has an estimated production start-up date of 2026. The go-ahead had been scheduled for the end of this year, but there have been delays related to the yields of the advanced manufacturing process (state-of-the-art 2-nanometer chips, hyper-miniaturised and with a new, more efficient internal structure) and difficulties in finding high-profile customers. The move, however, pleased the market: Samsung +6.83% in Monday morning's session on the Seoul Stock Exchange. Tesla rallied with a 4.4 per cent top.
Partnership at a delicate time
The agreement comes at a difficult juncture for both companies. Tesla posted a 12 per cent year-on-year decline in revenues and a 16 per cent drop in net profit in the second quarter of the year, squeezing operating margins. Elon Musk spoke openly of 'some difficult quarters on the horizon', confirming that the path to new levels of automation will be longer than expected.
Samsung also finds itself in a complicated phase: the group's operating profit plummeted 56% in the second quarter, due to weakness in the semiconductor sector and delays in the approval of new high-capacity chips. The foundry division - the one that handles contract manufacturing - has been loss-making for several quarters, with plant saturation well below break-even.
Technology reshoring and US incentives
.The decision to locate the production of the new chips in Texas reflects an established trend: bringing technology-intensive manufacturing activities to US soil. Samsung has benefited from the Chips and Science Act with direct incentives of 4.75 billion and a potential package of more than 9 billion in tax credits and financing.
For the electric car manufacturer, relying on a partner with a plant in the US means reducing exposure to tariffs and supply disruptions, as well as simplifying logistics. 'Samsung,' was Musk's comment on X, 'has agreed to allow Tesla to help maximise production efficiency. This is a critical point, as I will personally follow the line. And the factory is conveniently located not far from my home'. Tesla is based in Austin, Texas.
