Samsung signs $16.5 bn Tesla chip deal, Elon Musk confirms Texas fab will make AI6 chips

Samsung Electronics has signed a multibillion-dollar chip supply agreement with Tesla Inc, marking a major win for the South Korean firm’s foundry business, which has been facing continued losses.

On Saturday, Samsung had disclosed a $16.5 billion deal with a global client for semiconductor supply but did not reveal the customer's identity, citing confidentiality requirements. The deal, which runs through the end of 2033, is now confirmed to involve Tesla.

In a reply to a post on X, Tesla CEO Elon Musk confirmed the development, ending speculation around the unnamed client mentioned in Samsung’s weekend announcement.



In a separate post, Musk said, “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. Samsung currently makes AI4. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.”


"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," Musk said.


Musk also said that the $16.5 billion number is just the 'bare minimum'. "Actual output is likely to be several times higher."

Samsung is aiming to revive its contract manufacturing business, which has lagged behind Taiwan’s TSMC in recent years. The deal is expected to help reduce operating losses in the division, which were estimated to exceed 5 trillion won ($3.63 billion) in the first half of 2025, Reuters reported citing Kiwoom Securities analyst Pak Yuak.

“The latest deal will help reduce losses at Samsung’s foundry business,” Pak said.

Despite being the world’s leading memory chip manufacturer, Samsung has struggled in the advanced chipmaking segment. Several major clients, including Apple and Nvidia, have opted for rival TSMC due to its edge in cutting-edge technology.

The agreement with Tesla also comes at a time when South Korea is pursuing deeper tech and trade ties with the United States, especially as negotiations continue over potential U.S. tariffs of up to 25%.

It remains uncertain how this order may impact production at Samsung’s new Texas factory, where operations have been delayed amid a lack of major contracts, Reuters reported.

(With inputs from Reuters)