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July was another eventful month for supply chain operators as new tariffs were negotiated, economic news was announced and companies shifted to second-half planning. Trade tensions dominated the headlines, with the U.S. administration threatening new tariffs on semiconductors, pharmaceuticals and imports from China, Canada and other countries.
In the electronics space, Samsung and Tesla inked a major artificial intelligence (AI) chip deal tied to Samsung’s Texas fab. Apple announced a substantial rare earth magnet investment with MP Materials to strengthen domestic sourcing. On the transportation front, Union Pacific and Norfolk Southern confirmed merger talks that could create the first U.S. coast-to-coast freight rail operator. Despite the volatility, companies across the supply chain are clearly making bold investments and moves with the goal of boosting resilience and stoking new innovation.
Key Moves and Market Signals
Samsung has inked a $16.5 billion chip manufacturing deal with Tesla to produce the automaker’s next-generation AI6 processor, according to Tom’s Hardware reporter Anton Shilov. The chips will be made at Samsung’s new fab in Taylor, Texas and are expected to power Tesla’s self-driving systems starting in 2029. The agreement runs through 2033 and is expected to help Samsung Foundry compete more effectively with TSMC.
According to Tom’s Hardware, Tesla engineers will work alongside Samsung to help improve production efficiency, a rare move in chip manufacturing. Samsung previously produced Tesla’s AI3 and AI4 chips; TSMC is handling the AI5. The AI6 processor may be built using 2nm-class technology, although specific details have not been disclosed.
Equipment installation at the Taylor site is expected to begin in 2026, with test production and evaluation scheduled for late 2027. The deal secures a key customer for the Texas fab and is expected to strengthen the momentum behind domestic semiconductor manufacturing.
Rare Earth Magnet Production
Apple is investing $500 million in MP Materials to produce rare earth magnets at a new facility in Fort Worth, Texas. The magnets will be used in Apple products, and the deal is part of a larger effort to bring more of the company’s supply chain operations to the U.S.
The two companies will also build a recycling facility in Mountain Pass, Calif. to recover rare earth materials from used electronics and manufacturing scrap. “Rare earth materials are essential for making advanced technology,” said Apple CEO Tim Cook in a press release, “and this partnership will help strengthen the supply of these vital materials here in the United States.”
The project is expected to increase U.S. capacity for rare earth magnet production and support new manufacturing jobs. It’s also expected to give Apple a more stable domestic supply of critical materials used in its devices. The investment is part of Apple’s larger pledge to spend $500 billion in the U.S. over the next four years.
Rail Merger Talks Advance
Also in July, Union Pacific and Norfolk Southern confirmed they are in advanced merger talks that could create the first U.S. freight railroad with coast-to-coast service, according to the AP. The deal would combine the largest and smallest of the six major freight railroads. If approved, it could streamline long-haul operations, improve network efficiency and offer more consistent service for domestic shippers.
Industry analyst Tony Hatch told the AP the announcement suggests the companies have likely identified potential benefits (i.e., efficiency gains) that could help secure the deal’s approval. However, past mergers have caused disruptions, and the Surface Transportation Board (STB) now requires clear evidence that any deal will enhance competition. Large shippers like Amazon, Dow and U.S. Steel are expected to weigh in as the process unfolds.
