Elon Musk confirmed Monday that Tesla has signed a $16.5 billion semiconductor deal with Samsung Electronics, securing next-generation chip production from Samsung's new factory in Taylor, Texas. The agreement, which runs through 2033, is intended to manufacture Tesla's AI6 chips, a successor to the AI4 chips currently powering Tesla's Full Self-Driving system.
"Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip. The strategic importance of this is hard to overstate," Musk wrote on X. "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress."
Samsung's shares jumped more than 6.8% on Monday, reaching their highest level since September 2024. Tesla's stock rose 1.9% in U.S. premarket trading following Musk's disclosure.
The South Korean firm initially withheld the identity of its customer in regulatory filings, citing confidentiality concerns, but Musk confirmed Tesla's involvement through a series of social media posts. Samsung announced that the contract became effective on July 26, 2025, and will continue through December 31, 2033.
"The $16.5B number is just the bare minimum. Actual output is likely to be several times higher," Musk added.
Samsung's foundry business has struggled in recent quarters. In October, Reuters reported that the company delayed installing ASML chipmaking equipment in Texas due to a lack of confirmed customers. Analysts had previously warned that the Taylor fab was effectively idle. "This order is quite meaningful," said Ryu Young-ho, a senior analyst at NH Investment & Securities.
The Texas facility is part of Chairman Jay Y. Lee's strategy to expand beyond memory chips into contract manufacturing. Samsung holds just 8% of the global foundry market, far behind industry leader TSMC's 67%, according to Trendforce.
Pak Yuak, an analyst at Kiwoom Securities, estimates that Samsung's foundry division posted losses exceeding 5 trillion won ($3.6 billion) in the first half of the year. The Tesla deal is expected to help offset some of those losses as Samsung attempts to reassert itself in the competitive chip space.
Tesla currently relies on Samsung to produce AI4 chips and plans to use TSMC for its upcoming AI5 chips, initially manufactured in Taiwan and later in Arizona. While the timeline for AI6 production has not been finalized, SK Securities analyst Lee Dong-ju projects that chips may not roll out until 2027 or 2028.
Meanwhile, Samsung is facing growing pressure in the artificial intelligence race, trailing rivals like TSMC and SK Hynix in both logic and high-bandwidth memory chips. Earlier this month, the company projected a 56% drop in second-quarter operating profit, largely attributed to underperformance in its foundry unit.
