Elon Musk Confirms $16.5B Chip Deal Between Tesla and Samsung
Tesla CEO Elon Musk has announced a $16.5 billion agreement with Samsung Electronics to supply chips for the U.S. automaker’s future vehicles. The deal is set to boost Samsung’s struggling contract chip manufacturing business and make use of its new fab in Taylor, Texas.
Musk revealed on X that Samsung’s facility will produce Tesla’s next-generation AI6 chip, adding that Tesla will work closely with Samsung to improve production efficiency. “I will walk the line personally to accelerate the pace of progress,” Musk wrote, noting that the Texas fab is located near his residence.
Samsung’s shares jumped nearly 7% to their highest level since September 2024, while Tesla’s stock rose almost 2% in U.S. premarket trading following the announcement. Musk suggested the actual value of the deal could exceed the stated figure, saying “the $16.5B number is just the bare minimum.”
The Taylor plant, which has faced repeated delays and struggled to attract customers, is now expected to play a crucial role in Samsung’s push to expand its foundry business, an area where it lags far behind industry leader TSMC, which controls about 67% of the global market. Samsung currently holds just 8%, according to TrendForce.
Samsung already produces Tesla’s AI4 chips, which power its Full Self-Driving system. TSMC is set to manufacture Tesla’s upcoming AI5 chips, with production expected to begin in Taiwan and later move to Arizona.
While no timeline has been provided for AI6 chip production, analysts believe it could begin as early as 2027 or 2028, though Tesla has a history of missing deadlines.
Industry experts say the deal could help reduce losses in Samsung’s foundry division, which reportedly exceeded ₩5 trillion ($3.6 billion) in the first half of 2025. The partnership also underscores Tesla’s strategy to diversify its chip suppliers as it ramps up development of advanced AI hardware for its vehicles.
Samsung had previously announced the multibillion-dollar contract without naming the client, citing confidentiality. Sources later confirmed to Reuters that Tesla was behind the order, which will run through 2033.
