Tesla CEO Elon Musk has announced a $16.5 billion chip supply deal with Samsung Electronics, a partnership expected to boost the South Korean giant’s struggling foundry business.
Under the agreement, Samsung’s new chip fabrication plant in Taylor, Texas, will produce Tesla’s next-generation AI6 chips. Musk shared that Tesla will actively assist in optimizing production at the facility, located near his residence, adding, “I will walk the line personally to accelerate the pace of progress.”
Musk also noted on X that the $16.5 billion figure represents a minimum commitment, with actual production volumes likely to be several times higher.
Following the announcement, Samsung’s shares jumped 6.8% to their highest level since September 2024, while Tesla’s stock rose 1.9% in premarket trading.
The Taylor plant has previously struggled to secure major clients, making this Tesla order a significant breakthrough. Reports last October indicated Samsung had delayed equipment deliveries due to weak demand.
Samsung currently manufactures Tesla’s AI4 chips for the Full Self-Driving system. While TSMC will produce the upcoming AI5 chips, Samsung has now secured the contract for the more advanced AI6 generation.
Although no exact timeline was given, AI6 production is expected to start in 2027 or 2028. Musk had earlier stated AI5 chips would be ready by late 2026.
Samsung, the world’s largest memory chipmaker, aims to grow its contract manufacturing segment, which currently holds only about 8% of the global market—far behind industry leader TSMC’s 67%.
The deal, spanning through 2033, was initially announced without revealing Tesla as the customer. Multiple sources have since confirmed Tesla’s involvement.
This partnership comes as Samsung faces heavy pressure in the booming AI chip market. The company recently forecast a 56% drop in Q2 operating profit, with foundry losses exceeding $3.6 billion in the first half of the year.
Industry experts believe this deal could mark a turning point for Samsung, providing a crucial boost in its efforts to compete in a highly capital-intensive and technologically demanding sector.
