Elon Musk confirms $16.5 billion chip deal with Samsung for Tesla’s next-gen AI6 hardware

Tesla CEO Elon Musk has announced a $16.5 billion chip supply agreement with Samsung Electronics, confirming the South Korean tech giant as the manufacturer of Tesla’s next-generation AI6 chips. The move is expected to revitalise Samsung’s delayed foundry project in Taylor, Texas, and strengthen its ambitions in the competitive contract chip manufacturing sector.

“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,” Musk posted on X on Monday.

Samsung shares surged more than 6% following the announcement. The company had previously revealed the multibillion-dollar deal without naming the client, citing confidentiality. Reuters later confirmed Tesla as the buyer through three sources familiar with the matter.

The chips will likely be produced at Samsung’s upcoming Texas facility, which has faced setbacks due to a lack of major customers. Musk suggested that Tesla will be actively involved in improving efficiency at the plant. “Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” he wrote.

Samsung currently manufactures Tesla’s A14 chips, used in its Full Self-Driving system. Production of the newer A15 is expected to begin by late 2026, placing the AI6 generation further down the line. TSMC, a key competitor, is handling Tesla’s AI5 chips, first in Taiwan and later in Arizona.

The new deal gives Samsung a crucial lifeline as it tries to reduce losses in its contract chip business. Analysts estimate the division posted losses exceeding 5 trillion won (roughly $3.6 billion) in the first half of this year.

Samsung’s foundry arm has been under strain as major clients like Apple, Nvidia and Qualcomm have shifted their business to TSMC, which dominates the global market with a 67% share, compared to Samsung’s 8%, according to Trendforce data.

The deal arrives at a pivotal time for Samsung, just ahead of its earnings report, and amid ongoing US-South Korea trade discussions focused on deepening cooperation in semiconductors and shipbuilding.