Did Samsung just say "checkmate" to Taiwan Semiconductor?

September 27, 2025 — 12:00 pm EDT Written by Adam Spatacco

Key Points

• Elon Musk announced on X that Tesla is collaborating with Samsung to help produce its custom AI chips.
• This development may seem surprising as Taiwan Semiconductor Manufacturing dominates nearly 70% of the global chip foundry business.
• Although the partnership between Samsung and Tesla represents a great victory, there are some important nuances to understand about this agreement.

When investors think of the 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 that drive next-generation data centers at an unprecedented scale.

However, operating more quietly in the background is Taiwan Semiconductor Manufacturing. Although TSMC (, as it is also known, is less flashy than its peers in the race for artificial intelligence chips )AI(, the company's supporting role is, nonetheless, crucial.

As the market leader with nearly 70% market share, TSMC is the manufacturer behind many of the industry's most advanced AI processors. Its dominance has left rivals like Intel struggling to catch up, with significant market share gains appearing more like a dream than a measurable reality.

But in a surprising turn, Tesla's CEO, Elon Musk, recently highlighted a major breakthrough for one of those rivals, Samsung Electronics )OTC: SSNL.F(, giving its investors much-needed optimism. The announcement raises an important question: Will Samsung's latest victory usher in a new era of growth and pose a serious challenge to TSMC's supremacy?

Why Samsung's agreement with Tesla matters

At the end of July, Musk announced on X that Tesla had signed a $16.5 billion deal with Samsung to produce its next generation of AI chips, known as AI6. Samsung will manufacture these chips at a new foundry in Texas, strategically positioning the company closer to Tesla's headquarters and strengthening its presence beyond South Korea.

Tesla's upcoming innovations, especially its autonomous vehicles and humanoid robots, will require highly sophisticated chip designs and enormous computing power to function. This makes securing advanced foundry services essential for the company's ambitions in a rapidly evolving AI landscape.

How does Samsung's relationship with Tesla affect TSMC?

At first glance, an agreement of this magnitude may seem like a major setback for TSMC. However, the reality is more nuanced.

Musk clarified that TSMC will manufacture the predecessor chip to the AI6, aptly named AI5. In other words, Tesla is deliberately collaborating with multiple foundry partners as a cautious strategy aimed at reducing risks and ensuring redundancy.

Although Samsung's victory provides a credibility boost to its lagging foundry business, analysts at Morgan Stanley said it is unlikely that the agreement will significantly affect TSMC's dominance or serve as a material obstacle to its growth.

Moreover, as a major chip supplier for tech giants like Nvidia and Apple, the company maintains a strong position to further deepen its ties with the largest investors in AI.

Has Samsung delivered a checkmate against its fiercest rival?

Samsung investors have obtained tangible proof that strengthens the company's long-term prospects, but TSMC's enduring technological position remains supported by entrenched scale, leadership in advanced processors, and deep customer relationships. For now, this agreement underscores that Samsung can still compete for marquee contracts and gain relevance in an industry where TSMC's reputation for excellence remains firmly intact.

On a more macro level, the agreement also points out that as AI applications become increasingly sophisticated, leading companies like Tesla are interested in maintaining options by diversifying their key manufacturing partners to ensure stability, flexibility, and resilience in the supply chain.

For investors, the broader conclusion is clear: Samsung's relationship with Tesla illustrates that the company is capable of winning significant battles. However, TSMC continues to move forward.

More than a checkmate, this development resembles more of a fleeting stalemate at best, a dynamic that will continue to evolve as the global demand for next-generation chip architectures accelerates and further intensifies the foundry race.