South Korean media: Samsung signs a 22.7 trillion won chip manufacturing contract, Musk says actual scale may be several times larger

Samsung Electronics' semiconductor business has successfully secured a large-scale manufacturing contract worth 22 trillion won. This is a "much-needed rain" for Samsung after a long period of difficulty in securing orders in the advanced process field.

On the 28th, Samsung Electronics announced that the company has signed a semiconductor manufacturing supply contract worth 165.4416 billion US dollars. The contract period runs from July 2025 to December 2033.

That day, Elon Musk, CEO of Tesla, publicly stated on his personal "X" account that "Samsung's new factory in Texas will be specifically used to produce Tesla's next-generation AI6 chips."

Musk said, "165 billion dollars is just the minimum amount, and the actual production is expected to be several times higher than this number. He also emphasized, "Few people can understand the importance of this news, but its significance will become evident in 2-3 years."

According to reports, AI6 is an artificial intelligence (AI) chip used by Tesla for autonomous driving, planned to be manufactured by Samsung using 2-nanometer advanced process technology.

The largest order, opening the "blood vessels" of Samsung

This contract is the largest single-order in the history of Samsung's foundry business, and it is also the first large-scale order from a major technology company using 2-nanometer advanced process technology.

Foundry business refers to manufacturing chips designed by fabless companies. In this business, the key is to make large initial investments to build and operate factories, then to secure "big customers and long-term contracts." TSMC rose rapidly in the early 2010s by securing Apple's mobile chip production orders, and became the world's leading foundry in the early 2020s by manufacturing NVIDIA AI chips.

Although Samsung Foundry is the second-largest foundry in the world, it has long been unable to obtain large external customer orders. With the AI semiconductor and investment boom, TSMC's foundry business orders have increased sharply in recent years, with companies queuing up for orders, and prices continue to rise. In contrast, Samsung and Intel have not gained customer trust due to yield and quality issues, only barely handling internal sales such as Samsung Galaxy phone chips or Intel central processors (CPUs). Samsung's foundry business is estimated to have lost over 4 trillion won last year.

This order is a powerful blow that opens the "blood vessels" of Samsung's foundry business. The Samsung foundry factory in Taylor, Texas, which had previously been postponed due to lack of customers, is also expected to be put into operation.

Sam Sung does not want to follow in Intel's footsteps

This year, Samsung Electronics has postponed the original plan to mass-produce 1.4 nanometers by two years, focusing instead on improving the completion rate of 2-nanometer process technology. On the 1st, Samsung officially announced adjustments to its foundry strategy at the foundry partner forum. The direction has shifted from prioritizing the capture of advanced process production to securing customers and ensuring their satisfaction with stable quality.

This order is part of this strategy. It breaks the vicious cycle of "no customers leading to no investment, factories stalling, and technological experience stagnation." At the same time, Samsung also shoulders the task of not repeating the mistakes of Intel's foundry. Although the U.S. government provides policy support such as Department of Defense orders for Intel's foundry, its own shortcomings in technical and service innovation cannot be compensated by external forces. Intel's second-quarter foundry business recorded an operating loss of more than 4.4 trillion won, and it has announced that it will no longer invest without customer support.

The significance of Samsung's foundry in the U.S.

From the current situation, the policy tone of the Trump administration is, "it is not necessarily required that American chips must be made by American companies." The previous Biden administration supported American company Intel, while the Trump administration recognized NVIDIA's collaboration with TSMC, Foxconn, and other companies to build AI supercomputers in the United States.

Now, after Intel has exited the advanced foundry competition, the only companies that can produce advanced chips in the U.S. are TSMC (located in Arizona) and Samsung.

Musk revealed on the "X" platform that he has ordered the most advanced chips from Samsung's factory in Taylor, Texas, and said, "The strategic significance of this factory cannot be overestimated." He also added, "I will personally go to the site to speed up progress, and the factory is very convenient because it is close to my home."

On the local date of the 27th, the U.S. and the EU reached an agreement to exempt each other from tariffs on semiconductor equipment. Although they previously imposed 15% tariffs on each other, reaching a tariff exemption agreement in areas where there are no alternatives reflects the will not to harm the U.S. semiconductor industry.

On the 27th, Japanese Minister of Economic Revitalization Akizawa Ryohei was interviewed by NHK and stated regarding the 550 billion dollar investment support plan for the U.S., "If Taiwanese semiconductor companies build factories in the U.S., using Japanese components or producing products suitable for the Japanese market, they may also become eligible for support."

This means that if TSMC's U.S. factory uses Japanese equipment and components, it may be eligible for support. The industry believes that the success of Samsung's Taylor, Texas foundry could become a turning point for South Korean material, component, and equipment companies to enter the U.S. market and future U.S. investments.

Source: Central Daily

Original: https://www.toutiao.com/article/1838959794323722/

Statement: The article represents the views of the author.