Tesla has entered into a massive $16.5 billion contract with Samsung for its next generation AI6 chips, according to a regulatory filing by the South Korean firm and confirmation from Tesla CEO Elon Musk. The Chips will be manufactured in Texas according to Musk.
CNBC reports that Tesla has signed a $16.5 billion contract with Samsung Electronics for the supply of advanced semiconductors. The deal, which was initially disclosed in a regulatory filing by Samsung without naming the counterparty, was later confirmed by Tesla CEO Elon Musk on social media platform X.
According to the filing, the contract’s effective start date is July 26, 2025, marking the commencement of order receipt, and its end date is set for December 31, 2033. Musk provided further details, revealing that Samsung’s new Texas fab will be dedicated to manufacturing Tesla’s next-generation AI6 chip, emphasizing the strategic importance of this partnership.
Musk also mentioned that Samsung has agreed to allow Tesla to assist in maximizing manufacturing efficiency, a critical point that he intends to oversee personally to accelerate progress. He hinted that the deal with Samsung could potentially exceed the announced $16.5 billion value.
Samsung, the world’s second-largest provider of foundry services behind Taiwan Semiconductor Manufacturing Company (TSMC), manufactures chips based on designs provided by other companies. The company had previously announced its goal to commence mass production of 2-nanometer technology in its foundry business and secure major orders for this next-generation technology. Smaller nanometer sizes in semiconductor technology indicate more compact transistor designs, resulting in enhanced processing power and efficiency.
The partnership between Tesla and Samsung comes at a time when the South Korean tech giant is facing challenges in its foundry and memory businesses. Samsung expects its second-quarter profit to more than halve due to weak orders for its foundry services and struggles to capture AI demand for its memory business. The company has fallen behind competitors SK Hynix and Micron in high-bandwidth memory (HBM) chips, an advanced type of memory used in AI chipsets.
Local South Korean media outlets have also reported that American chip firm Qualcomm could place an order for chips manufactured using Samsung’s 2-nanometer technology, further solidifying Samsung’s position in the advanced semiconductor market.
The Tesla-Samsung deal is expected to have significant implications for both companies and the broader electric vehicle and semiconductor industries. For Tesla, securing a long-term supply of advanced chips from a leading manufacturer like Samsung is crucial for the development and production of its future AI-powered vehicles. The dedicated Texas fab and close collaboration on manufacturing efficiency could give Tesla a competitive edge in the rapidly evolving EV market.
For Samsung, the contract with Tesla provides a substantial boost to its foundry business and reinforces its position as a key player in the production of cutting-edge semiconductors. The deal could also help Samsung regain ground in the AI chip market, where it has recently lagged behind competitors.
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
