Tesla and Samsung Electronics have signed a $16.5 billion deal for chip supply until 2033. This deal supports Samsung’s struggling chip contract manufacturing business. Tesla CEO Elon Musk announced that Samsung’s new Texas factory in Taylor will be dedicated to making Tesla’s next-generation AI6 chip. He also mentioned that he will personally oversee manufacturing efficiency at the plant, which is near his residence.
Samsung had previously announced the deal without naming Tesla, citing confidentiality. However, it was confirmed by several publications that it was Tesla. The agreement comes as Samsung faces tough competition from rivals like TSMC and SK Hynix in AI chip production, hence impacting Samsung’s profits and market share. Samsung’s Texas plant project had delays, but this deal may revive it and ensure production from 2026 onwards.
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 😃
— Elon Musk (@elonmusk) July 28, 2025
The new agreement is seen as a boost that could reduce Samsung’s substantial losses, estimated at over $3.6 billion in the first half of the year for its foundry business. Although the contract is large, it likely does not involve Samsung’s cutting-edge 2-nanometer technology, but instead, this deal focuses on AI6 production.
The minimum contract value is $16.5 billion; the output may be much higher. The deal might strengthen South Korea-US partnerships in geopolitical significance to ease tariffs. Production at the Texas fab is expected to start in 2026. These chips will enhance Tesla vehicles’ AI capabilities, including autonomous driving and other advanced features
