Samsung Electronics has secured a $16.5 billion, multi-year contract to supply semiconductor chips for Tesla, a move that is poised to reshape the competitive landscape for both companies. The deal, confirmed by Tesla CEO Elon Musk and regulatory disclosures, will have Samsung manufacturing Tesla’s next-generation AI6 chips at its Taylor, Texas, fabrication facility through 2033.
Elon Musk took to X to stress the scale of the partnership: “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.” He also mentioned Tesla will be hands-on with Samsung to streamline production, personally pledging to help ramp up the Taylor plant, which happens to be near his Austin home.
Although Samsung leads the world in memory chips, its foundry business has trailed rivals like TSMC, which counts Apple, Nvidia, and Qualcomm among its clients. The Tesla contract is expected to inject serious momentum into Samsung’s foundry operations, which saw over 5 trillion won ($3.6 billion) in operating losses in the first half of 2025. Immediately after the announcement, Samsung shares surged more than 3%. The contract is big, it amounts to roughly 7.6% of Samsung’s projected 2024 revenue.
For Tesla, the deal diversifies its supply chain, shifting some advanced chip production away from TSMC and fitting neatly with its push for vertical integration in Full Self-Driving (FSD) hardware and AI ecosystems. Tesla’s AI6 chip is the key to both its FSD platform and its Dojo supercomputer, will use Samsung’s cutting-edge process technology. While there’s talk of collaborating on even more AI compute chips down the road, no additional projects have been included in the current agreement.
Analysts expect the agreement will boost Samsung’s foundry sales by up to 10% per year, serving as the anchor order the underutilized and delayed Taylor facility needed. The deal doesn’t just reflect evolving chip industry dynamics; it also underscores growing South Korea-U.S. tech ties and sets Samsung up for future chipmaking wins as the sector heats up once again.
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