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’s $16.5bn chipmaking deal with Tesla is set to be a crucial test of the Korean tech group’s ability to meet the high demands of Elon Musk while making the corporate changes needed to revive its struggling semiconductor business.

South Korea's Samsung Electronics signed a $16.5 billion, eight-year contract to supply semiconductors to a global company, which Elon Musk said was Tesla.,