Tesla Signs $16.5 Billion Chip Supply Deal with Samsung to Produce Next-Gen AI Chips
Tesla CEO Elon Musk has announced a landmark $16.5 billion chip supply agreement with Samsung Electronics, marking a significant milestone for both companies. The deal is set to revitalise Samsung’s struggling foundry business while supporting Tesla’s development of its next-generation AI6 chips for autonomous driving technologies.
Samsung to Produce AI6 Chips at Texas-Based Taylor Fab
The agreement centres on Samsung’s state-of-the-art chip fabrication facility in Taylor, Texas, which will manufacture Tesla’s AI6 processors. This move signals renewed momentum for the plant, which had faced delays due to a lack of major clients. With this Tesla partnership, the fab is expected to become a key component in Samsung’s strategy to expand its footprint in the global chip foundry market.
Elon Musk confirmed the collaboration in a series of posts on X (formerly Twitter), highlighting the strategic location of the fab near his residence and emphasising Tesla’s involvement in boosting the plant’s manufacturing efficiency.
“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,” Musk stated.
He added that the $16.5 billion figure is “just the bare minimum,” hinting that the total output could eventually be much higher.
Samsung Shares Surge Following Tesla Deal
Following the announcement, Samsung’s stock surged by up to 6.8%, hitting its highest level since September 2024. Market analysts view the deal as a turning point for Samsung’s foundry unit, which currently holds just 8% of the global market compared to TSMC’s dominant 67% share, according to TrendForce data.
Ryu Young-ho, a senior analyst at NH Investment & Securities, noted, “Samsung’s Taylor fab had virtually no customers, so this order is quite meaningful.”
Tesla’s AI Chip Roadmap: From A14 to AI6
Samsung already manufactures Tesla’s A14 chip, which powers the automaker’s Full Self-Driving (FSD) system. TSMC is responsible for the upcoming AI5 chip, initially produced in Taiwan and later in Arizona. Musk has previously suggested that the A15 chip will be available by late 2026, placing AI6 production likely in 2027 or 2028—though Tesla has a history of shifting timelines.
Industry analyst Lee Dong-ju of SK Securities expects the new chips to roll off the production line around 2027 or 2028, aligning with Tesla’s long-term plans for autonomous driving and AI integration.
Samsung’s Push into the Foundry Business
The chip deal with Tesla aligns with Samsung Chairman Jay Y. Lee’s long-term strategy to expand the company’s presence in logic chip manufacturing. Traditionally known as the world’s largest memory chip maker, Samsung is aggressively investing in its foundry operations to compete directly with market leader TSMC.
Samsung’s Taylor facility, though delayed to begin operations in 2026, is a critical component of this strategic shift. The Tesla partnership not only validates the plant’s importance but could also attract additional customers seeking alternatives to TSMC.
