Samsung Electronics has signed a $16.5 billion contract for supplying semiconductors to a major global corporation. The South Korean tech giant did not name the buyer but stated in a filing that the start date of this contract was 26 July 2024 and the end date was 31 December 2033.
Samsung Electronics‘ shares rose by as much as 3.5% in Seoul after the announcement, the company’s biggest intraday gain in almost four weeks, according to a Bloomberg report.
In its filing, the company noted that the deal signed on Saturday was related to contract chip manufacturing but stated that other details of the agreement including the name of its counterpart and the terms would not be disclosed until the end of 2033 in order to “protect trade secrets.”
“Since the main contents of the contract have not been disclosed due to the need to maintain business confidentiality, investors are advised to invest carefully considering the possibility of changes or termination of the contract,” a CNBC report quoted the filing as saying.
Samsung lagging behind in AI chip making race
Samsung Electronics is among the biggest players in contract chip manufacturing which is also known as foundry services. It is the second biggest provider of these services globally, only behind Taiwan Semiconductor Manufacturing Company (TSMC). While Samsung counts Tesla and Qualcomm among its customers, TSMC has customers like Apple and Nvidia.
The announcement of the new deal comes at a time when Samsung has been struggling to compete in the race for making artificial intelligence chips that has led to a hit on its profits and share price.
Samsung has been losing share to TSMC in contract manufacturing owing to technological challenges that the South Korean giant faces in mastering advanced chip manufacturing, a Reuters report cited analysts as saying.
Samsung is all set to deliver its earnings call on Thursday where it expects the second-quarter profit to more than halve, as per a CNBC report.
