Samsung Electronics has broken the monopoly of Taiwan's leading semiconductor foundry company TSMC by securing a supply deal for Tesla's next-generation artificial intelligence (AI) semiconductor for autonomous driving, the 'AI5'. The foundry business division, which has been considered a weak point for Samsung Electronics' semiconductors, is showing clear signs of revival as it has recently signed consecutive production contracts with global big tech companies, and its own mobile application processor (AP), the Exynos 2600, is likely to be installed in the Galaxy S26.

● Strengthening Tesla-Samsung Electronics Alliance

On the 22nd (local time), Elon Musk, CEO of Tesla, announced during the third quarter (July-September) earnings conference call that "the AI5 chip will be worked on by both Samsung Electronics and TSMC."

Tesla's AI semiconductors are installed in vehicles to assist with autonomous driving functions and are planned to be used in humanoid robots in the future.

Samsung Electronics is currently producing Tesla's latest AI semiconductor, the AI4. Tesla initially planned to have the next-generation AI5 semiconductor produced entirely by TSMC and then return to Samsung Electronics for the subsequent AI6 model. However, with Musk's unexpected announcement, it has been decided that Samsung Electronics will also participate in the production of the AI5.

In the semiconductor industry, this order is seen as a strengthening of the AI semiconductor alliance between Tesla and Samsung Electronics. There is speculation that during discussions for the development and production of the AI6, Tesla highly evaluated Samsung Electronics' foundry technology, leading to the decision to entrust the production of the AI5 as well.

A semiconductor industry official stated, "The fact that Tesla has entrusted Samsung Electronics with the production from AI4 to AI6 signifies the recognition of Samsung Electronics' foundry business unit's technological capabilities," adding, "The decision not to rely entirely on TSMC for the production of the next-generation AI5 is also a background factor for this decision."

The AI5, along with the AI6, is likely to be produced at the Taylor semiconductor plant in Texas, USA, which is scheduled to be operational next year. It is reported that the AI4 is being mass-produced at Samsung's Pyeongtaek foundry plant.

● Samsung System Semiconductors Seize Rebound Opportunity

Samsung Electronics' system semiconductors, including the LSI business unit and foundry business unit, which have been posting trillion-won losses quarterly since last year, are now poised for a rebound with consecutive order successes.

In July, Samsung Electronics' system semiconductors secured a KRW 23 trillion contract with Tesla for the AI6 semiconductor foundry, followed by a design and foundry contract for the iPhone image sensor (CIS), known as the "eye of the smartphone," from Apple in August.

Recently, it has been reported that the company's mobile AP chip, the Exynos 2600, is likely to be installed in the Galaxy S26, which is scheduled for release next year, indicating a potential turnaround in next year's performance. The Galaxy S25 exclusively used Qualcomm's Snapdragon as the mobile AP chip instead of Samsung Electronics' Exynos. Additionally, the foundry business unit is expected to benefit if the next-generation high-bandwidth memory (HBM), HBM4, is mass-produced.

Kim Jeong-ho, a professor at the Department of Electrical and Electronic Engineering at KAIST, stated, "The combination of global big tech companies reducing their dependence on TSMC and the increase in Samsung Electronics' foundry yield is leading to consecutive orders," adding, "This will be an opportunity not only for Samsung Electronics but also for the expansion of the domestic semiconductor ecosystem."

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