Rethinking Samsung

We have never recommended Samsung Electronics (KRX: 005930) stock to our readers for a simple reason that says nothing bad about the company.

We focus on companies whose stock is leveraged primarily to a technology edge. Samsung has edges galore, but the company is big and well-diversified. In addition to cutting-edge tech, it makes… televisions and other run of the mill consumer products that dilute its high technology leverage.

Are we ready to change our view? Recent developments are tempting. Almost 10 years ago, Robert Castellano argued that Samsung had adopted a strategy of following Apple (NASDAQ: (AAPL) into every major technology battleground, to position itself where Apple needed external capabilities and thereby preparing to re-enter Apple’s semiconductor supply chain. At the time, Apple had launched its Internet of Things (IoT) venture, HomeKit ecosystem, and was expanding R&D for a project Robert referred to as the “Big Apple”—its autonomous electric car.

Samsung, arriving later to both IoT and electric vehicles (EVs), began closing the gap: acquiring Joyent for cloud infrastructure and investing $450 million in Chinese EV maker BYD (HK 1211) to enter eco-friendly vehicles. In February 2024, Apple shut down its EV project, moving most of the personnel into artificial intelligence, naturally a large part of the EV project in any event. Yet nearly a decade later, Robert’s thesis is reflected in two major developments.

Samsung has secured an eight-year, $17.5 billion contract to produce Tesla’s (NASDAQ: TSLA) AI6 chips for next-generation autonomous driving, robotics, and AI inference workloads at its Taylor, Texas, plant. Although Apple abandoned EVs, Samsung’s decision to follow them into that market bore fruit in the Tesla contract. In parallel, after a 10-year absence from Apple’s chip supply chain, Samsung will produce advanced three-layer wafer-stacked image sensors for the iPhone 18 at its Austin fab—breaking Sony’s (NYSE: SONY) long-standing hold on this critical component.

Table 1 shows the alignment between Robert’s 2016 projections and today’s reality. Samsung has followed Apple into EVs, regained a position in its supply chain, and established a role in every technology segment where Apple seeks to compete.

Tesla AI6–Target Deployment Scenarios

The AI6 chip is designed as a flexible platform capable of serving Tesla’s in-vehicle computing needs, powering the Optimus robot, supporting Tesla data centers, and driving AI inference workloads for X.ai. The ability to adjust packaging, memory, and power characteristics for each application maximizes manufacturing efficiency while enabling Tesla to scale the same architecture across multiple product lines.

Table 2 shows how Tesla’s one AI6 architecture can be adapted for multiple form factors, performance envelopes, and workloads. Samsung’s role in producing AI6 strengthens its position in advanced process manufacturing and adds to the credibility that helped it win back Apple’s business.

While deployment flexibility is crucial, the more pressing question for investors is whether Samsung can keep up with Tesla’s demand curve. Table 3 compares projected AI6 unit demand against Samsung’s planned production capacity, showing that even as Taylor ramps, supply may trail demand by roughly 10% per year through 2028. This makes execution in Texas pivotal both for Tesla’s roadmap and for Samsung’s credibility as a foundry rival to TSMC.

Investor Takeaway

Samsung’s simultaneous wins with Tesla and Apple are not isolated victories—they confirm a strategy that has been in motion for nearly a decade. The Tesla AI6 contract pushes Samsung’s 2nm process into high-volume, complex production, enhancing its competitive standing against Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) in automotive, AI, and HPC markets. The Apple image sensor deal breaks Sony’s long monopoly and re-establishes Samsung as a key supplier for one of the most protected product ecosystems in the world.

These wins reinforce each other. Tesla’s contract builds manufacturing credibility that appeals to Apple, while the advanced packaging and wafer stacking for Apple strengthen Samsung’s ability to attract other high-value semiconductor projects. For investors, Samsung is now positioned not just as a consumer electronics brand or memory leader, but as a multi-sector semiconductor partner capable of competing at the highest level across multiple industries. Samsung has undergone repeated disappointments in recent years as it failed to keep up with Taiwan Semiconductor in the competition to manufacture advanced low nanometer devices at acceptable yields. The imprimatur from Apple and Tesla testifies to how much progress the company has made.

Semiconductor devices are part of Samsung’s Device Solutions division, which includes memory, logic devices, and the foundry business, which manufactures both for Samsung and for external designers. Device Solutions accounts for almost two-thirds of Samsung’s revenue. Pulling even with or even ahead of TSM in the elite two nanometer node is a huge event.

Consider, as well, that manufacturing these elite components in Texas is a substantial advantage against the geopolitical tensions around Taiwan. It’s true that TSM also manufactures in America and Samsung’s Korean facilities face no particular threat from China. Nevertheless, in an unfortunately fragmenting world, this is one more potential advantage for a Samsung comeback. We will be thinking a lot about Samsung and suggest you do as well.