Samsung Electronics (KS: 005930 ) received an upgrade from Macquarie analysts after confirming a major foundry deal with Tesla (NASDAQ: TSLA ), a move the brokerage believes will help turn around the company's struggling chipmaking division.
The brokerage upgraded Samsung shares to "outperform" from "neutral" and raised its target price to 95,000 won, implying a total shareholder return (TSR) of 37 percent.
Tesla’s recently announced 22.8 trillion won order — which will run from 2027 to 2033 — primarily involves the production of AI6 chips using a 2nm process at Samsung’s wafer fab in Tyler, Texas.
Macquarie estimates the contract has annual revenue of about 2.9 trillion won, with potential peak sales of 5 trillion won in a given year.
"Re-winning the Tesla foundry contract will not only improve its fab utilization rate, but also provide a reference for larger projects in the future," Macquarie analyst Daniel Kim said in a report on Monday.
While the deal’s contribution margins are likely to remain smaller due to depreciation costs associated with the Taylor plant, the analyst highlighted its strategic value.
"This order should enable Samsung's foundry division to establish a good reference for larger mobile chip companies such as Qualcomm (NASDAQ: QCOM ) or AMD (NASDAQ: AMD ) and gain experience in advanced geometry nodes, 2nm GAA and BS-PDN," Kim continued.
In addition to the foundry business, Macquarie also pointed out Samsung's strong position in the traditional DRAM market, which is in an upcycle. Samsung is expected to gain more market share as competitors face wafer capacity constraints and memory density accelerates.
"The DRAM upcycle, while overshadowed by the more powerful HBM, remains strong and is likely to continue through 2026," the report said.
Macquarie raised its operating profit estimates for 2026 and 2027 by 19% and 16%, respectively, driven by higher DRAM prices and reduced foundry losses.
Samsung's HBM business is positioned as a long-term upside option. While near-term contribution is limited, Macquarie believes sales are expected to improve starting in 2026 as redesigned chips and better yields support future growth.