Production of Tesla AI6 Chips for Eight Years at Texas Plant
Helps Attract New Major Customers
To Revive Struggling Foundry Business
Corporate Culture Must Shift to Customer and Engineer Focus
The Financial Times (FT) reported on July 21 (local time) that the $16.5 billion (approximately 23 trillion won) long-term artificial intelligence (AI) chip supply contract between US electric vehicle maker Tesla and Samsung Electronics will serve as a test for the potential revival of Samsung's foundry (semiconductor contract manufacturing) business.
Under this contract, Samsung Electronics will produce Tesla's next-generation AI6 chips for eight years at its new foundry currently under construction in Taylor, Texas. Samsung Electronics stated that this contract "demonstrates our advanced process capabilities, and will help ensure stable operation of the new US plant and attract additional major customers."
Samsung Electronics once led the foundry market, but its market share stood at only 7.7% in the first quarter of this year. Taiwan's TSMC maintains a dominant first place with a 67.6% share.
Samsung's decline in the foundry business began in earnest in the mid-2010s when Apple switched its main chip supplier from Samsung to TSMC. The loss of large-scale orders made it difficult to improve yield rates, and this low yield led to production delays, a decline in customer trust, and failure to secure additional orders.
MS Hwang, an analyst at Counterpoint Research, pointed out, "The core of Samsung's concerns is its inability to reliably deliver promised volumes," adding, "Due to low yield rates and ongoing production delays, the company has lost the trust of its clients."
FT cited industry experts' analysis that the Tesla contract alone is not enough to guarantee a revival of the foundry business. Even within Samsung, there is a view that in order to successfully collaborate with big tech companies amid the global AI boom, a transformation across the entire corporate culture is necessary.
Lee Jonghwan, professor of semiconductor engineering at Sangmyung University, said, "Memory semiconductors can be produced first and sold later, but in the foundry business, production only starts after receiving an order," adding, "For Samsung to succeed, it must transform its corporate culture to be much more customer- and engineer-centric."
However, some believe that simply securing a demanding client like Tesla could lead to additional orders from other big tech companies. Peter Lee, an analyst at Citigroup, assessed, "The experience of producing AI6 chips will help Samsung build AI semiconductor manufacturing capabilities and attract new customers."
There are also predictions that this contract alone will not be enough for Samsung to catch up with TSMC. Dylan Patel, founder of SemiAnalysis, said, "The eight-year contract period gives Tesla room to withdraw if Samsung experiences supply disruptions," and judged that this contract alone does not guarantee Samsung's pursuit of TSMC.
FT analyzed that Tesla's desire to produce AI6 chips in the US, combined with the lack of additional production capacity at TSMC's Arizona plant, may have worked in Samsung's favor in winning the order. The outlet also reported that Tesla currently sources AI5 chips from TSMC and may be strategically fostering competition between Samsung and TSMC.
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