Samsung Electronics has secured a landmark $16.5 billion contract to supply semiconductors to Tesla, marking one of the largest chip deals in the electric vehicle and AI sectors.

The agreement, effective from July 26, 2025, will run through December 31, 2033, according to a regulatory filing by Samsung and a confirmation post by Tesla CEO Elon Musk on X.

Although Samsung initially withheld the counterparty’s name, citing a confidentiality request “to protect trade secrets,” Musk later confirmed on X that Tesla is the customer.

“Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip,” Musk wrote. “The strategic importance of this is hard to overstate. Samsung currently makes AI4. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.”

Musk added that Tesla will actively participate in optimizing Samsung’s chip production.

“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress,” he said.

He also suggested the actual value of the agreement could exceed $16.5 billion.

A Strategic Bet on AI and EV Hardware

The new deal gives Tesla a critical hardware edge in its race to dominate the AI-driven electric vehicle space. The AI6 chip is believed to power Tesla’s next-generation Full Self-Driving (FSD) and AI inference systems, potentially transforming the company’s vehicles into more autonomous, intelligent machines. Samsung, in turn, gains a marquee client and a fresh opportunity to regain ground in the AI semiconductor race — an area where it has recently fallen behind rivals like SK Hynix and Micron.

The agreement is a boost to Samsung’s foundry business, which has seen sluggish orders in recent quarters and has struggled to match AI demand for memory chips. As recently as April, the company had set a goal to start mass production of 2-nanometer chips, the most advanced manufacturing node currently in development. These chips feature smaller, more compact transistors, delivering greater processing power and energy efficiency — key requirements for high-performance AI workloads.

South Korean media have also speculated that Qualcomm may soon join Tesla in placing orders for chips manufactured on Samsung’s 2nm technology.

Samsung Rallies on News Despite Tough Earnings Outlook

Investors cheered the Tesla news, sending Samsung’s shares soaring more than 6% on Monday, their highest level since September 2024. The deal comes just days ahead of Samsung’s scheduled earnings release on Thursday, where the company is expected to report a more than 50% drop in second-quarter profit. Analysts attribute the sharp decline to underwhelming foundry orders and weak memory chip sales, particularly in high-bandwidth memory (HBM), where Samsung trails rivals.

While SK Hynix has emerged as the lead supplier of HBM chips to AI giant Nvidia, Samsung has reportedly struggled to get its latest HBM offerings certified. A recent report indicates that Nvidia’s validation of Samsung’s new HBM chips has been postponed until at least September, further delaying its attempt to regain footing in a fiercely competitive market.

Foundry Wars and AI Chip Race Intensify

Samsung’s renewed push in the foundry space — particularly with U.S.-based manufacturing — appears to be a calculated move to gain ground against Taiwan Semiconductor Manufacturing Company (TSMC), the dominant force in global chip fabrication. TSMC is currently building out major operations in Arizona and has already secured Tesla’s AI5 chip production.

Samsung now ensures it will remain integral to Tesla’s long-term roadmap by securing the AI6 chip order, especially as competition in AI hardware intensifies. With governments and corporations increasingly seeking supply chain resilience and geographic diversification, Samsung’s U.S. fab in Texas is positioned to play a central role.

But the company isn’t out of the woods yet. Despite the Tesla deal, Samsung warned in its filing that investors should exercise caution, noting that “main contents of the contract have not been disclosed… and there remains a possibility of changes or termination.”

Nevertheless, the strategic value of the partnership cannot be overstated. It is expected to secure the chip supply for Tesla’s future vehicles and AI systems. For Samsung, it’s a chance to reassert itself as a top-tier player in both the foundry and AI semiconductor race, at a time when tech giants are scrambling for silicon.

The Manufacturers Association of Nigeria (MAN) is urging the Central Bank of Nigeria (CBN) to immediately review its monetary policy stance and slash interest rates, warning that the prevailing tight monetary policy is crippling Nigeria’s real sector, especially manufacturing and agriculture.

The call came in reaction to the CBN’s Monetary Policy Committee (MPC) decision at its 301st meeting held July 21–22, 2025, where it voted unanimously to retain the Monetary Policy Rate (MPR) at a record-high 27.5% for the second consecutive time this year.

While the CBN argues that the rate retention is part of a broader plan to sustain the disinflationary momentum, MAN contends the policy has yielded little benefit for producers. In a statement, the association described the CBN’s contractionary stance as a chokehold on manufacturing and real-sector productivity.

Lending rates to manufacturers now exceed 35%, MAN revealed, noting that many operators are now either closing shop, cutting production, or relocating. The association said the consequences are evident in surging production costs, lower capacity utilization, reduced output, widespread layoffs, and rising prices of finished goods.

In 2024, the average capacity utilization of the manufacturing sector fell to 57%, down from 59% the previous year. Worse still, unsold finished goods more than doubled year-on-year, jumping to N2.14 trillion in 2024 from N1.14 trillion in 2023.

MAN said this drastic surge is driven by declining consumer purchasing power, high interest on working capital, and the surging cost of imported inputs, all exacerbated by the steep naira depreciation and forex volatility.

“The expectation of MAN is to have a rate cut that is supported by a robust fiscal policy framework capable of facilitating improved access to long-term loans, enhanced productivity, and sustained economic growth,” the group said. It added that the present policy mix is skewed against production and investment.

Although Nigeria’s inflation rate fell marginally to 22.22% in June 2025 from 22.97% in May, food inflation remains stubbornly high and continues to climb. Experts say inflationary pressures have become structural, with major drivers such as insecurity, high logistics costs, naira volatility, and multiple taxes far beyond the reach of interest rate adjustments.

While manufacturers are the loudest voices, they are not alone. Agribusiness operators, particularly in food processing and commodity value chains, are equally suffocated by high borrowing costs and insecurity in production zones. With bank lending shrinking and microfinance institutions offering loans at 45% and above, many small businesses now rely on cooperative societies or shut down altogether.

MAN’s Policy Prescription

To reverse the trend, MAN rolled out a number of policy recommendations:

• Interest Rate Cut: MAN says the CBN must urgently slash the MPR to reduce the cost of credit, especially to critical sectors like manufacturing, agriculture, and energy.
• Nigeria First Policy: The group wants the government to adopt protectionist industrial policies that prioritize local content, encourage backward integration, and promote local patronage of Nigerian-made goods.
• Boost Agricultural Output: It urged the federal government to tackle insecurity in farming regions and fix logistics bottlenecks in agricultural supply chains. These, it said, will help reduce food inflation and raw material costs for agro-allied industries.
• Stimulate Consumption Through Income Redistribution: MAN emphasized that raising minimum wages, removing excessive taxes, and funding social protection programs could enhance consumer demand, which would in turn stimulate industrial output.

Backstory: MPC Standing Firm

At the last MPC meeting, CBN Governor Olayemi Cardoso said the decision to hold the rate steady was to maintain the momentum of disinflation, noting that the bank’s policies were beginning to show results. The slowdown in the inflation rate is an encouraging sign, he said.

However, analysts believe the marginal drop in headline inflation is not enough reason to maintain a policy that is clearly stifling production, discouraging investment, and worsening unemployment.

All 12 members of the committee voted to retain the rate, signaling a firm consensus in the apex bank to prioritize inflation control over growth stimulation—a move that MAN and other stakeholders fear could prolong Nigeria’s economic stagnation.

Some economists, including those at the Lagos-based Financial Derivatives Company, argue that the CBN should have started easing by now, especially after six months of aggressive hikes earlier in the year. They warn that keeping rates high could deepen the recession risk, especially with GDP growth at a slow pace and business confidence at a historic low.

Others support the CBN’s cautious approach, noting that a premature rate cut could weaken the naira further and reverse recent gains in foreign capital inflows.