Tesla and Samsung Move to Build Texas Value Chain

"Strategic Importance of Samsung's Taylor Plant"
Musk Highlights in Post on X
Plans for Infrastructure Linkage and Collaboration in Texas
"Possible That Cooperation with Samsung Is Seen as More Advantageous Than TSMC"

After Samsung Electronics signed a foundry (semiconductor contract manufacturing) deal with Tesla worth approximately 22 trillion won, there is growing analysis that both companies are moving to establish an independent semiconductor supply chain in Texas, United States?what is being called the "Texas value chain"?centered around the Taylor plant, which Elon Musk described as "strategic." This collaboration is gaining even more strategic significance in light of the anticipated imposition of semiconductor tariffs by the United States.

On August 5, Kyung Hee-kwon, a research fellow at the Korea Institute for Industrial Economics and Trade, stated, "Recently, states such as Nevada, Texas, and Florida in the U.S. are showing a trend of trying to establish nearly complete semiconductor value chains within their own borders. Elon Musk, CEO of Tesla, emphasizing on X (formerly Twitter) that 'the strategic importance of the Taylor plant being built by Samsung cannot be overstated' seems to reflect this context."

Given that the main infrastructure of both Tesla and Samsung is concentrated in Texas, there is speculation that CEO Musk may be considering a partnership that leverages the geographical proximity of the two companies. Tesla operates its major production base, "Giga Texas," in Austin, and Musk's residence is also located nearby. This plant produces next-generation electric vehicles such as the Model Y and Cybertruck, and related parts suppliers are clustered in the surrounding area.

Samsung Electronics also operates a foundry plant in Austin and is constructing a second semiconductor production line in nearby Taylor. These hubs are located about 30 to 40 minutes apart by car. Industry experts analyze that while the contract is ostensibly for Tesla to outsource the production of artificial intelligence (AI) chips to Samsung, in reality, it is closer to a strategic alliance aimed at building a region-centered supply chain and achieving technological synergy.

CEO Musk has commented regarding the contract amount (about 22.7648 trillion won) that "it will be several times more than that." Research fellow Kyung explained, "CEO Musk is currently trying to quickly produce the next-generation 'AI6' chip to lead the market. Given that TSMC's order volume is already exceeding capacity and mass production may be delayed, he may have judged that partnering with Samsung, whose production bases are closer to Tesla, would allow for faster production."

There are also predictions that the collaboration between the two companies could expand into the technological domain. Former Samsung Electronics President Lim Hyungkyu said, "For example, Tesla's AI technology could be integrated into Samsung's foundry plants, and Tesla could learn Samsung's foundry process technology to expand its business. Broad-based technological cooperation could enable the two companies to present a new model for Korea-U.S. semiconductor collaboration."

This contract is also raising expectations that Samsung Electronics could expand its leadership in the global foundry market. With Intel recently postponing foundry investments and production, Samsung has seized the opportunity to strengthen its position as the market's second-largest player by securing Tesla as a strategic client.

Former President Lim emphasized, "Cooperation with Tesla could be a turning point for Samsung to differentiate itself from TSMC. For Samsung, this is the moment to create a breakthrough, so the company must put all its efforts into producing Tesla's AI chips."

Research fellow Kyung also said, "Foundry is a contract manufacturing business that requires waiting for the right moment and then putting in utmost effort to generate significant profits when the opportunity comes. It appears that the time has come for Samsung Foundry, and now is the moment to make the most of this opportunity."