Samsung Electronics has broken the monopoly of Taiwan's leading semiconductor foundry company TSMC by securing a contract to supply Tesla's next-generation artificial intelligence (AI) semiconductor for autonomous driving, the 'AI5'. The foundry business division, which has been considered a 'pain 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 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 expected to be used in humanoid robots in the future.

Samsung Electronics is currently producing Tesla's latest AI semiconductor, the AI4. Initially, Tesla planned to have the next-generation AI5 semiconductor produced entirely by TSMC, with Samsung Electronics resuming production from the next model, the AI6 generation. However, with Musk's unexpected announcement, it was decided that Samsung Electronics would also participate in the production of the AI5.

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

An industry insider stated, "Tesla entrusting Samsung Electronics with the production from AI4 to AI6 signifies recognition of Samsung Electronics' foundry division's technological capabilities," and added, "The decision not to rely entirely on TSMC for the production of the next-generation flagship AI5 may also be a factor in 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. The AI4 is reported to be mass-produced at Samsung Foundry's Pyeongtaek plant.

● Samsung System Semiconductor Seizes Opportunity for Rebound

Samsung Electronics' system semiconductor, including the LSI division and foundry division, which have been posting trillion-won losses quarterly since last year, is now poised for a rebound with successive order successes.

In July this year, Samsung Electronics' system semiconductor division signed a KRW 23 trillion contract with Tesla for the outsourced production of AI6 semiconductors, followed by securing a design and production contract for the iPhone image sensor (CIS), known as the 'eyes of the smartphone', from Apple in August.

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

Kim Jung-ho, a professor at KAIST's Department of Electrical and Electronic Engineering, stated, "The decrease in global big tech companies' dependence on TSMC and the increase in Samsung Electronics' foundry yield have combined to result in 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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