Tesla and Samsung Sign $16.5B Chip Deal, Musk Confirms
Tesla CEO Elon Musk announced that the company has signed a $16.5 billion agreement with Samsung Electronics to source chips. This partnership is set to strengthen Samsung’s struggling contract manufacturing segment, which has been working to secure new clients. As a result of the announcement, Samsung shares surged 6.8%, reaching their highest point since September of last year. Similarly, Tesla shares rose 1.9% in U.S. premarket trading.
The chips will be manufactured at Samsung’s new facility in Taylor, Texas. Musk confirmed that the plant will produce Tesla’s next-generation AI6 chip, reviving a delayed project due to Samsung’s previous client acquisition challenges. In a post on X, Musk said, “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. And the fab is conveniently located not far from my house.”
Moreover, he emphasized that the $16.5 billion value marks only the minimum output. “The $16.5B number is just the bare minimum. Actual output is likely to be several times higher,” he added in a follow-up post.
Samsung’s Taylor facility had previously faced delays, including the postponement of ASML chip equipment deliveries, as it had not secured any major clients. Ryu Young-ho, a senior analyst at NH Investment & Securities, noted, “Samsung’s Taylor fab so far had virtually no customers, so this order is quite meaningful.”
What the Timeline Might Look Like
Although no official production date for the AI6 chip was disclosed, Musk has stated that AI5 chips will begin production by the end of 2026. This implies the AI6 chip could enter production a year or two later. Lee Dong-ju, an analyst at SK Securities, anticipates that the AI6 chips might be produced around 2027 or 2028. Still, Tesla’s historical delays suggest this timeline may shift.
Currently, Samsung manufactures Tesla’s AI4 chips, which support the Full Self-Driving assistant system. Meanwhile, AI5 chips are scheduled for production by TSMC, first in Taiwan and later in Arizona, according to Musk.
A Strategic Move for Both Companies
Samsung, already a global leader in memory chips, is aiming to boost its foundry operations. This strategy is central to Chairman Jay Y. Lee’s long-term vision of diversifying beyond memory chips. While Samsung leads in memory production, its foundry business holds just 8% of the global market significantly behind TSMC’s dominant 67% share, according to Trendforce.
Previously, Samsung had announced the $16.5 billion deal without disclosing the client, citing the customer’s request for confidentiality. The agreement will extend through the end of 2033, offering a long-term opportunity for both companies to benefit.
