Samsung agrees to manufacture Tesla's new AI chips for $16.5 billion

The South Korean company has secured its largest single customer order in its history as it seeks to boost its chip manufacturing business.

Samsung and Tesla have reached a multi-year, $16.5 billion deal under which the Korean company will manufacture new artificial intelligence chips for Elon Musk's company at its Texas factory.

The announcement is significant news for Samsung and its foundry business in the United States, as it is the largest deal its chip division has ever secured with a single customer. Its value is equivalent to 7.6% of the company's revenue in 2024.

Tesla CEO Elon Musk confirmed the deal on his social media platform, X, stating that Samsung's new Texas facility will be dedicated to manufacturing the American company's next-generation AI6 chip. "Its strategic importance is undeniable," the magnate stated in his post.

Musk noted that Samsung is currently manufacturing the AI4 chip, while TSMC is responsible for the AI5 chip. The AI6 chip will be used in humanoid robots, autonomous vehicles, and AI data centers.

Samsung also agreed to allow Tesla, and specifically Musk, to help maximize manufacturing efficiency. "This is critical, as I will be driving the process myself to accelerate progress. Additionally, the factory is conveniently located near my home," Musk stated at X.

The deal comes at a crucial juncture for the Korean manufacturer, which is struggling to catch up with Taiwan Semiconductor Manufacturing Company (TSMC) in the foundry business, which makes chips under contract for clients such as Nvidia, Qualcomm, and Apple, which design chips but don't have their own factories to produce them.

The South Korean company had delayed the start of operations at its 2-nanometer chip plant in Taylor, Texas, until 2026 in an attempt to convince major customers to use its facilities instead of TSMC's.

Research firm TrendForce estimates that TSMC's share of global foundry revenue rose to 67.6% in the first quarter of 2025, while Samsung's share declined to 7.7% over the same period. According to the Financial Times, the South Korean tech group's contract chip manufacturing business is estimated to have suffered an operating loss of 4 trillion won ($3 billion) in the first half of this year.