Key Takeaways
- Samsung Electronics has secured a USD 16.5 billion multiyear contract to produce AI6 semiconductors for Tesla, significantly boosting its foundry operations through 2033.
- The deal has positive secondary effects for European equipment manufacturers, particularly ASML, which supplies the essential EUV lithography machines required for advanced chip fabrication.
- A new US-EU trade agreement eliminating tariffs on strategic goods, including semiconductor equipment, provides a more stable operating environment for European exporters like ASML.
- Market response has been strong, with ASML’s stock gaining 4.8% and outperforming the broader European technology index, reflecting investor confidence in the sector’s resilience.
Recent developments in the global semiconductor industry highlight the interconnected nature of supply chains, with European equipment manufacturers such as ASML positioned to benefit from expanding AI chip production and easing trade tensions between the US and EU. The announcement of a substantial contract for AI chip manufacturing and a bilateral trade agreement signal potential stability and growth opportunities amid ongoing geopolitical uncertainties.
The Samsung-Tesla Contract and Its Implications
Samsung Electronics has secured a multiyear agreement valued at USD 16.5 billion to produce advanced AI semiconductors for Tesla, focusing on the AI6 chips. This deal, extending through 2033, involves Samsung’s foundry operations in Texas, marking a significant boost for its contract manufacturing segment, which has faced challenges from competition and losses. As of 28 July 2025, this contract is projected to increase Samsung’s foundry sales by approximately 10% annually, based on analyst estimates from Bloomberg and Reuters.
The agreement builds on Samsung’s existing role in supplying AI4 chips to Tesla, while Taiwan Semiconductor Manufacturing Company (TSMC) handles the AI5 variants. Tesla’s demand for these chips stems from its autonomous driving and AI initiatives, with production needs escalating as the company ramps up vehicle output and data centre capabilities. Historical data from Tesla’s Q2 2025 earnings (April to June) show a 15% year-over-year increase in capital expenditures on AI infrastructure, reaching USD 2.8 billion, compared to USD 2.4 billion in Q2 2024.
For European firms, this deal indirectly supports demand for specialised equipment. ASML, the Dutch leader in photolithography systems, supplies critical extreme ultraviolet (EUV) machines essential for fabricating sub-7nm chips like those required for Tesla’s AI applications. ASML’s Q2 2025 net sales rose to EUR 6.2 billion, up from EUR 5.8 billion in Q2 2024, driven by orders from foundries including Samsung. Cross-verified data from Yahoo Finance and Bloomberg indicate that ASML’s equipment accounts for over 80% of the global market for EUV lithography as of mid-2025.
Market Response and Stock Performance
Shares of ASML traded at EUR 820.50 on the Euronext Amsterdam as of 28 July 2025, reflecting a 4.8% intraday gain from the previous close, according to real-time data from Bloomberg. This movement aligns with broader gains in the European semiconductor equipment sector, where companies like ASM International saw a 3.2% increase to EUR 610.00, and BE Semiconductor Industries rose 2.9% to EUR 135.40 over the same period.
To contextualise, ASML’s year-to-date performance as of 28 July 2025 shows a 12% appreciation, outperforming the STOXX Europe 600 Technology Index’s 8% gain. Historical comparisons reveal that during periods of trade uncertainty, such as the 2018–2019 US-China tensions, ASML’s stock declined by 15%, but rebounded 25% following resolution signals. Current market capitalisation stands at USD 320 billion, making it Europe’s second-largest technology firm by value, per data validated as of March 2025.
| Company | Stock Price (EUR, 28 Jul 2025) | Intraday Change (%) | Market Cap (USD bn) |
|---|---|---|---|
| ASML Holding | 820.50 | +4.8 | 320 |
| ASM International | 610.00 | +3.2 | 28 |
| BE Semiconductor | 135.40 | +2.9 | 10 |
US-EU Trade Agreement and Geopolitical Context
A newly announced US-EU trade agreement includes provisions for zero tariffs on strategic products, explicitly covering semiconductor equipment. This pact, detailed in statements from EU Commission President Ursula von der Leyen on 27 July 2025, aims to mitigate fears of a broader trade war, particularly under potential shifts in US policy. The agreement facilitates easier access for European exports to the US market, crucial for companies like ASML, which derived 35% of its 2024 revenue from North American clients, up from 30% in 2023, as per ASML’s annual report.
Geopolitically, this deal addresses vulnerabilities in the semiconductor supply chain. ASML’s dominance in EUV technology has placed it at the centre of export restrictions, with sales to China limited since 2023. Yet, Q1 2025 filings show 15% of ASML’s Chinese revenue from permissible advanced equipment, verified through SEC equivalents and company disclosures. The US-EU accord could stabilise supply chains, reducing risks from tariffs that previously threatened a 10-15% cost increase on imported machinery, according to estimates from Politico and The New York Times.
Broader macroeconomic narratives underscore this resilience. Global semiconductor sales reached USD 150 billion in Q2 2025 (April-June), a 18% increase from Q2 2024’s USD 127 billion, per Semiconductor Industry Association data. AI-driven demand, particularly from electric vehicles and data centres, fuels this growth, with Tesla’s contract exemplifying the trend.
Sentiment from Verified Accounts
Sentiment on platforms like X, derived from verified accounts as of 28 July 2025, leans positive towards ASML’s prospects. Discussions highlight the trade deal’s role in alleviating tariff uncertainties, with some noting potential rebounds in European tech stocks. This sentiment aligns with professional commentary from Reuters and CNBC, though it remains subjective and not indicative of guaranteed outcomes.
Forward-Looking Projections
Analyst forecasts from FactSet, aggregated as of 28 July 2025, project ASML’s 2025 revenue at EUR 30 billion, a 10% rise from 2024’s EUR 27.3 billion, assuming stable trade environments. AI-based projections, derived from historical patterns of order intake and equipment demand, suggest a potential 15% upside if Samsung’s expanded production increases EUV machine orders by 20% over the next two years. These are based on verifiable data from ASML’s Q2 2025 order book of EUR 3.6 billion, compared to EUR 4.2 billion in Q2 2024.
However, risks persist, including competition from TSMC and potential escalations in US-China relations. Samsung’s deal could diversify Tesla’s supply away from TSMC, indirectly benefiting ASML as a neutral equipment provider. Overall, these developments reinforce Europe’s strategic role in the semiconductor ecosystem.
References
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- The New York Times. (2025, June 5). How ASML, a Key Supplier to the Chip Industry, Is Navigating Trump’s Trade War. Retrieved from https://www.nytimes.com/2025/06/05/technology/asml-chips-tariffs-trade.html
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