Samsung Foundry Wins Apple and Tesla: $16.5B Deals End Years of Losses
Samsung's struggling foundry division has secured two game-changing contracts that could finally end its streak of massive losses. A $16.5 billion Tesla deal for AI6 chips confirmed by Elon Musk and Apple's partnership for iPhone camera sensors announced this week mark a dramatic turnaround for the world's second-largest contract chipmaker.
The Tesla contract, running through December 2033, will produce next-generation AI6 chips at Samsung's Taylor, Texas facility. Elon Musk confirmed Samsung's "giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip," calling the strategic importance "hard to overstate".
The AI6 chips will power Tesla's Full Self-Driving system, Optimus robots, and data centers. Samsung previously manufactured Tesla's AI3 and currently produces AI4 chips, while TSMC will handle AI5 production.
Apple announced Samsung will manufacture "innovative new technology for making chips, which has never been used before anywhere in the world" at the Austin facility. Industry reports suggest these are 3-stack CMOS image sensors (CIS) for iPhone 18 cameras, potentially featuring 200MP resolution.
Samsung converted part of its Austin S1 fab line for CIS production, with 10,000 wafer monthly capacity starting March 2026. This breaks Sony's decade-long monopoly as Apple's exclusive camera sensor supplier.
Samsung's foundry market share dropped to 8.1% in Q4 2024 from 9.1% in Q3, while TSMC grew to 67.1% - creating a 59 percentage point gap. Reports indicate Samsung's foundry business faces operating losses of several trillion won in 2024.
Poor yields on 3nm processes and client losses to TSMC have plagued the division. Samsung reportedly shut down 50% of production lines by year-end 2024 to cut costs.
President Trump announced roughly 100% tariffs on chip imports but exempted domestically manufactured semiconductors. This policy directly benefits Samsung's Texas operations and explains Apple's supply chain shift.
Samsung received $4.75 billion in CHIPS Act funding for its $37 billion Texas investment, creating over 15,000 jobs across Austin and Taylor facilities.
The Tesla contract represents 7.6% of Samsung's 2024 revenue of $217.7 billion. Analysts estimate the contract could generate $2.1 billion annually and reduce foundry losses by over 70%.
Combined with Apple's camera sensor business, these deals provide Samsung's foundry division its first major growth opportunity in years. Samsung shares surged 6.8% following the Tesla announcement.
Tesla's AI6 chip uses Samsung's 2-nanometer process technology and is designed for exaflop-level performance. Apple's 3-stack CIS technology stacks photodiodes, transistors, and analog-to-digital converters separately to reduce noise and improve low-light performance.
Production timelines suggest AI6 chips in 2027-2028, while iPhone 18 camera sensors target 2026.
These partnerships validate Samsung's foundry technology after years of skepticism. Tesla allowing Samsung to "assist in maximizing manufacturing efficiency" with Musk personally involved demonstrates unprecedented collaboration.
For Apple, the deals diversify supply chains beyond TSMC and align with US manufacturing policies. The move also reduces exposure to Taiwan geopolitical risks.
The autonomous driving chip market is expected to grow from $25.7 billion in 2025 to $46.1 billion by 2032, positioning Samsung strategically in AI automotive semiconductors.
Success with Tesla and Apple could attract additional customers seeking TSMC alternatives. However, Samsung must prove it can deliver advanced chips at scale without yield issues that have plagued previous efforts.
Samsung's foundry turnaround hinges on flawless execution of these landmark contracts. After years of losses and market share decline, the company finally has anchor customers and technology validation needed to compete with TSMC's dominance.