Samsung's win, Intel's pullback, and a shifting chips landscape
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Samsung's $16.5 billion deal to manufacture chips for Tesla is the latest headline jolting semiconductor stocks in recent days.
- 📈 Samsung shares rose nearly 7% in South Korea, showing just how important a major customer is in the contract chip manufacturing business.
- 📉 Failing to secure such a customer helped send Intel's stock plummeting over 8% Friday.
- 🇪🇺 And the EU trade deal announced yesterday carries big implications across the sector too, with Dutch chip-equipment manufacturer ASML rising on news that such products will move both ways tariff-free.
The Tesla contract is a much-needed win for Samsung's foundry business, which makes chips that other clients design. Foundry is a market dominated by Taiwan-based TSMC, which held over 67% of the global share in Q1.
- 🌞 For Samsung, which will manufacture the Tesla chips at a coming Texas facility, the deal not only brings in big revenue through 2033 — it also sends a signal of confidence in its fabrication technologies, which could help it win even more customers, analysts say.
🌧️ Intel is badly in need of this exact type of win. The company last week said it was slashing costs tied to its own foundry business, which has failed to secure any significant customers, and will build out its new fabrication technologies only on pace with confirmed customer commitments.
- "I do not subscribe to the belief that if you build it, they will come," CEO Lip-Bu Tan told investors on a call Friday.
Zoom out: News of the U.S.-EU trade deal, meanwhile, sent shares in ASML up sharply in Amsterdam today.
- The tariff news is good for everyone building and planning new chip facilities in the United States. Intel, Samsung and TSMC are all major clients of ASML, which makes machines critical for advanced chip production.
