Tesla’s CEO, Elon Musk, has announced a massive chip supply deal worth $16.5 billion with Samsung Electronics. This partnership is expected to boost Samsung’s chip-making business, which has been facing some challenges recently.
As part of the agreement, Samsung will produce Tesla’s new AI6 chips at its advanced chip plant in Taylor, Texas. These chips will power Tesla’s future technologies, including its self-driving system.
Musk shared that Tesla will help make the chip production smoother and faster. He said the factory is close to his home, and he even plans to visit the site personally to speed up the process.
On social media, Musk said the $16.5 billion amount is just the starting point, and the total value of the deal could end up being much more.
Following this news, Samsung’s stock jumped nearly 7% to the highest it’s been since September 2024. Tesla’s shares also saw a small increase during premarket trading.
Analysts explained that Samsung’s Taylor facility had trouble finding big clients before now. In fact, there were delays last year due to a lack of orders. But with Tesla signing on, things are finally looking up for the plant.
Samsung already makes Tesla’s AI4 chips used in their self-driving cars. While a different company, TSMC, is building the AI5 chips, Samsung has now won the contract for the even more advanced AI6 version.
There is no exact date for when production will start, but it’s expected to begin in either 2027 or 2028. Earlier, Musk said the AI5 chips would be ready by late 2026.
Samsung, known as the largest maker of memory chips, has been trying to grow its chip production services. Right now, it only holds 8% of the market compared to TSMC’s 67%.
The deal, which will last until 2033, was first shared without naming Tesla. But many reliable sources have since confirmed that Tesla is the client.
This new partnership comes at a time when Samsung is under pressure in the AI chip market. The company recently reported a 56% drop in its second-quarter profits, with big losses in its chip production business.
Experts believe this Tesla deal could be the big break Samsung needs to get back on track and stay competitive in the fast-changing tech world.
