Tesla CEO Elon Musk has announced a massive $16.5 billion chip supply deal with Samsung Electronics, marking a major shift in the global semiconductor landscape. The agreement will see Samsung produce Tesla’s next-generation AI6 chips at its Taylor, Texas factory, boosting the struggling foundry arm of the South Korean tech giant.
Samsung’s shares jumped 6.8% following the news, their highest level since September 2023. The contract is expected to run through 2033 and may help Samsung claw back relevance in the high-stakes race for artificial intelligence chips, where it lags behind industry leaders like TSMC and SK Hynix.
Musk confirmed the deal on X, noting that Tesla will help “maximize manufacturing efficiency” at the Texas fab and added he will personally oversee progress. “The $16.5B number is just the bare minimum,” Musk said, suggesting actual output may be significantly higher.
The agreement comes at a crucial moment for Samsung. The Taylor facility has faced delays, and reports indicated it had virtually no major clients. This Tesla contract provides a lifeline for the plant, whose launch has already been postponed to 2026.
While no production timeline for the AI6 chips has been announced, industry analysts predict output could begin in 2027 or 2028. Tesla’s current Full Self-Driving chips (AI4) are already made by Samsung, while TSMC will produce the AI5 chips in Taiwan and Arizona.
This deal highlights the ongoing geopolitical stakes in semiconductor supply chains. Though not confirmed as part of current U.S.-South Korea trade talks, the partnership strengthens ties between the two countries’ tech sectors amid discussions about potential U.S. tariffs.
Samsung, the world’s largest memory chip maker, has struggled in the foundry sector, holding only 8% of the global market compared to TSMC’s dominant 67%. The deal is expected to ease the bleeding from Samsung’s contract manufacturing unit, which analysts estimate lost over $3.6 billion in the first half of 2025.
With Tesla betting big on AI and Samsung desperate to compete in next-gen chip production, the deal marks a strategic win for both companies and a potential realignment of global chip dominance.
