Tesla Signs $16.5 Billion Chip Deal With Samsung, Musk Confirms
Tesla CEO Elon Musk announced that the company has signed a $16.5 billion chip supply deal with Samsung Electronics (KS:005930). The agreement is set to boost Samsung’s struggling contract chip manufacturing business.
Following the news, Samsung shares jumped more than 6% in early trading.
Tesla to Use Samsung’s Texas Fab for Next-Gen AI Chips
Musk revealed on social media platform X (formerly Twitter) that Samsung’s upcoming Texas semiconductor facility will produce Tesla’s AI6 chips, calling the deal strategically significant.
“The new fab will be dedicated to manufacturing Tesla’s next-generation AI6 chip,” Musk said. “Its importance cannot be overstated.”
Although Musk did not specify the location, industry experts believe he is referring to Samsung’s delayed Taylor, Texas plant, which has yet to become operational. The facility faced delays amid Samsung’s difficulty in securing large-scale customers.
Tesla Involved in Manufacturing Optimization
Musk added that Tesla will help Samsung improve manufacturing efficiency at the site. “I’ll personally oversee progress at the fab,” he wrote. “It’s not far from my home, so I’ll be walking the line myself.”
No specific timeline was given for AI6 chip production. However, Musk previously said AI5 chips would begin production by the end of 2026, implying that AI6 could follow shortly after.
Samsung currently produces Tesla’s A14 chips, which power the company’s Full Self-Driving (FSD) system. Meanwhile, TSMC is handling production of the AI5 chips, first in Taiwan and later in Arizona.
Samsung’s Foundry Business Gets a Lifeline
In October, Reuters reported that Samsung had delayed accepting chipmaking equipment from ASML (AS:ASML) due to the lack of committed customers for its Texas fab. That delay pushed the plant’s launch to 2026.
Samsung had already announced the $16.5 billion contract earlier but did not disclose the customer. The company said the client had requested confidentiality. Three sources later confirmed to Reuters that the buyer was Tesla, and that the contract would run through 2033.
The deal is expected to help reduce financial losses in Samsung’s foundry unit, which reportedly lost over ₩5 trillion ($3.6 billion) in the first half of 2025, according to analyst Pak Yuak from Kiwoom Securities.
Samsung Seeks to Close Gap With TSMC
Samsung is currently the world’s top memory chip producer, but it lags far behind in contract chip manufacturing. According to Trendforce, Samsung holds only 8% of the global foundry market, compared to TSMC’s 67%.
Samsung’s strategy, led by Chairman Jay Y. Lee, aims to expand its presence in the foundry sector. However, the company has lost major clients like Apple, Nvidia, and Qualcomm to TSMC, which dominates advanced chip production.
Analysts say that technological challenges and client defections have hurt Samsung’s market share and slowed its progress in the race for AI chip leadership.
Deal Comes Amid Broader US-Korea Trade Talks
It remains unclear whether the Tesla–Samsung agreement is tied to ongoing trade negotiations between South Korea and the United States. Seoul is pushing for closer cooperation in semiconductors and shipbuilding as part of a broader effort to avoid possible 25% U.S. tariffs.
