Samsung confident that Musk deal will boost its struggling chipmaking business

Samsung's once-lucrative chipmaking business has been struggling in recent quarters. The company posted its earnings for the past quarter today, revealing a 94% decline in operating profit for the chip division.

There's hope that the company may be on the cusp of a turnaround in this division, as Tesla CEO Elon Musk announced a major $16.5 billion chipmaking deal with Samsung several days ago.

Musk announced that the deal will see Samsung manufacture Tesla's next-generation AI chip on the 2nm process at its new facility in Texas. While some expressed doubt on the company's ability to deliver on the deal, Musk publicly threw his weight behind Samsung.

Samsung is now hopeful that this major deal would encourage other large customers to trust in its 2nm process and utilize it for manufacturing of their chips. Samsung Vice President Noh Mi-jung said during the company's earnings call today that “we anticipate securing additional orders from large customers,” following the deal with Tesla.

The company has struggled to attract manufacturing orders on its advanced nodes as chip designers like NVIDIA, Qualcomm, and others have opted to utilize TSMC's nodes.

Concerns about yield rates have hung over like a dark cloud on Samsung's chipmaking division, but with this significant vote of confidence from Tesla, other companies may be encouraged to look more closely at the improvement in its capabilities, and prefer adding Samsung to their fabrication supply chain.