Tesla has signed a $16.5 billion semiconductor supply deal with Samsung Electronics, in what could become a pivotal partnership for both companies’ long-term strategies in artificial intelligence and advanced chipmaking. The deal, confirmed by Tesla CEO Elon Musk on X, marks a major commitment by the automaker as it prepares to deploy its next-generation AI6 chips in self-driving cars and humanoid robots. Samsung, for its part, is banking on the order to revitalize its loss-making foundry division, particularly its delayed chip factory in Taylor, Texas.
The South Korean company first disclosed the deal in a regulatory filing, stating that the contract would be effective from July 26, 2025, through December 31, 2033. Although the filing omitted Tesla’s name, citing confidentiality, Musk later confirmed the electric carmaker as the counterparty and offered details that extend beyond what Samsung has made public. “Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip,” Musk posted. “The strategic importance of this is hard to overstate.” He further noted that while the agreement is valued at $16.5 billion, the actual output could be “several times higher.”
According to Reuters, the deal may be a turning point for Samsung’s U.S. chip business, which has faced delays and struggled to secure high-profile clients. The Taylor factory, originally slated to open earlier, postponed operations to 2026 amid a lack of orders. In October 2024, the news agency reported that Samsung had delayed equipment deliveries from ASML, a key chipmaking machinery supplier. As analyst Ryu Young-ho from NH Investment & Securities told the outlet that the order is “quite meaningful,” particularly because the factory “so far had virtually no customers.”
From Tesla’s perspective, the chips produced under the deal will play a crucial role in the company’s future AI applications, especially its Full Self-Driving (FSD) system, robotaxis, and Optimus humanoid robots. Samsung currently manufactures Tesla’s AI4 chips, while the AI5, just finalized in design, will be made by TSMC, initially in Taiwan and later in Arizona. Musk has previously said the AI5 chips are expected to enter production by the end of 2026, suggesting AI6 production at Samsung may begin around 2027 or 2028. However, Reuters notes that Tesla has often missed such targets in the past.
For Samsung, the Tesla contract could not have come at a more critical time. Once a leader in memory chips, the company has lost ground in AI-centric high-bandwidth memory (HBM) chips to rivals like SK Hynix and Micron. According to CNBC, Samsung’s second-quarter profits are expected to more than halve, dragged down by weak orders and challenges in the AI memory segment. Its foundry business, which produces chips based on external designs, has been particularly unprofitable, estimated by analysts at Kiwoom Securities to have lost over $3.6 billion in the first half of 2025.
Despite the longer-term horizon for production, the announcement had an immediate impact on the markets. Samsung shares surged 6.8% this Monday (28), reaching their highest levels since September 2024, while Tesla shares rose 4.2%. The agreement signals a potential shift in Samsung’s strategic direction, aligning it more closely with U.S. tech firms and potentially influencing future trade negotiations between South Korea and the United States. While Musk described the collaboration as one where Tesla will help “maximize manufacturing efficiency, even pledging to personally “walk the line”, the long-term success of the partnership will depend on both execution and the broader AI and EV market trajectory.
