Samsung Electronics Co.’s surprise $16.5 billion chipmaking deal with Tesla Inc. has breathed new life into a foundry business all but written off by many investors.

Samsung Electronics Co. will produce AI semiconductors for Tesla Inc. in a new $16.5 billion pact that marks a win for its underperforming foundry division.

Samsung Electronics said on Thursday a trade deal that will see Washington charge 15% tariffs on imports from South Korea reduces uncertainty and it forecast major chip orders after signing a $16.5 billion deal with Tesla.