HomeFinanceDid Samsung Just Say "Checkmate" to Taiwan Semiconductor?
Did Samsung Just Say “Checkmate” to Taiwan Semiconductor?
Elon Musk announced on X that Tesla is partnering with Samsung to help produce its custom AI chips.
This development may seem striking since Taiwan Semiconductor Manufacturing commands nearly 70% of the global chip-foundry business.
While Samsung’s partnership with Tesla represents a major win, there are some important nuances to understand about this deal.
10 stocks we like better than Samsung Electronics ›
When investors think about powerhouses in the semiconductor industry, the usual names that dominate the conversation are Nvidia, Advanced Micro Devices, and Broadcom. These companies are responsible for designing the high-performance chips and networking hardware powering next-generation data centers at an unprecedented scale.
Operating more quietly in the background, however, is Taiwan Semiconductor Manufacturing(NYSE: TSM). While TSMC (as it is also known) is less flashy than its peers in the race for artificial intelligence (AI) chips, the company’s supporting role is nonetheless mission-critical.
As the world’s largest chip foundry by revenue — with almost 70% market share — TSMC is the manufacturer behind many of the AI industry’s most advanced processors. Its dominance has left rivals like Intel struggling to catch up, with meaningful market share gains appearing more like a pipe dream than measurable reality.
But in a surprising twist, Tesla CEO Elon Musk recently highlighted a big break for one of those rivals, Samsung Electronics(OTC: SSNL.F), giving its investors some much-needed optimism. The announcement raises an important question: Will Samsung’s latest win usher in a new era of growth and pose a serious challenge to TSMC’s supremacy?
In late July, Musk announced on X that Tesla had signed a $16.5 billion agreement with Samsung to produce its next-generation inference chip, known as the AI6. Samsung will be manufacturing these chips at a new foundry in Texas, strategically positioning the company closer to Tesla’s headquarters and reinforcing its footprint beyond South Korea.
Tesla’s upcoming innovations — most notably its Robotaxi platform and Optimus humanoid robot — will demand highly sophisticated chip designs and huge computing capacity to function. This makes securing advanced foundry services essential for the company’s ambitions in a rapidly evolving AI landscape.
Image source: Getty Images.
At first glance, a deal of this magnitude might look like a major setback for TSMC. The reality, however, is more nuanced.
Musk clarified that TSMC will manufacture the predecessor chip to the AI6 — aptly called the AI5. In other words, Tesla is deliberately engaging with multiple foundry partners as a strategic, cautious hedge aimed at reducing supply chain risk and ensuring redundancy.
While Samsung’s win provides a boost of credibility to its lagging foundry business, analysts at Morgan Stanley said that the deal is unlikely to meaningfully dent TSMC’s dominance or serve as a material headwind to its long-term revenue and earnings potential.
Moreover, as TSMC continues to invest in its own infrastructure here in the U.S., the company remains on secure footing to deepen its ties with AI’s biggest spenders even further.
Samsung investors have gained tangible proof that strengthens the company’s long-term prospects, but TSMC’s durable technological position remains supported by entrenched scale, advanced processor leadership, and deep customer relationships. For now, this deal underscores that Samsung can still compete for landmark contracts and carve out relevance in an industry where TSMC’s gold-standard reputation remains firmly intact.
At a more macro level, the deal also signals that as AI applications become increasingly more sophisticated, leading enterprises like Tesla are keen on maintaining choice by diversifying key manufacturing partners to ensure stability, flexibility, and supply chain resilience.
For investors, the larger takeaway is clear: Samsung’s relationship with Tesla illustrates that the company is capable of winning meaningful battles. Nevertheless, TSMC is still ahead.
Rather than a checkmate, this development looks more like a fleeting stalemate at best — a dynamic that will continue to evolve as global demand for next-generation chip architectures accelerates and further intensifies the foundry race.
Before you buy stock in Samsung Electronics, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Samsung Electronics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $652,872!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,092,280!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 189% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of September 22, 2025
Adam Spatacco has positions in Nvidia and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: short November 2025 $21 puts on Intel. The Motley Fool has a disclosure policy.
Did Samsung Just Say “Checkmate” to Taiwan Semiconductor? was originally published by The Motley Fool
