*

Samsung signs $16.5 billion chip supply deal, shares rise

3.5%

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Deal details undisclosed until 2033, involves contract

chip

manufacturing

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Samsung struggles with AI chip competition, losing market

share

to TSMC

(Add background and details throughout)

SEOUL, July 28 (Reuters) - Samsung Electronics ( SSNLF )

said on Monday it has signed a $16.5 billion deal to

supply chips for an unidentified major global company, sending

its shares up 3.5%.

The South Korean tech giant said the deal signed on Saturday

was for contract chip manufacturing and details of the agreement

including the counterpart and terms would not be disclosed until

the contract is completed at the end of 2033.

The deal comes as Samsung is struggling to compete in the

race to make artificial intelligence chips, which has hit its

profits and share price.

Samsung has customers like Tesla and Qualcomm ( QCOM )

for its foundry business, while bigger rival TSMC has

customers like Apple ( AAPL ) and Nvidia ( NVDA ).

The deal comes as South Korea is seeking U.S.

partnerships in chips and shipbuilding as it is making

last-ditch efforts to reach a trade deal to eliminate or cut

potential 25% U.S. tariffs.

It is not clear how the order would affect Samsung's

plan to start production at its new factory in Texas, which has

been delayed as it had struggled to win major customers.

Samsung is grappling to boost production yields of its

latest 2-nanometer technology, and the order is unlikely to

involve the cutting-edge tech, Lee Min-hee, an analyst at BNK

Investment & Securities, said.

Samsung has been losing market share to TSMC in contract

manufacturing, underscoring technological challenges the firm

faces in mastering advanced chip manufacturing to lure the likes

of Apple ( AAPL ) and Nvidia ( NVDA ) away from TSMC, analysts said.

($1 = 1,383.6800 won)