Samsung Signs $16.5 Billion Chip Supply Deal With Tesla

On July 28, 2025, Samsung Electronics announced a long-term $16.5 billion contract to manufacture Tesla’s next-generation AI chips (AI6) at its new Texas factory, in a deal confirmed by Tesla CEO Elon Musk.

• Samsung’s foundry business (contract chip manufacturing) has struggled, lagging behind Taiwan’s TSMC despite strong memory chip sales Samsung did not initially name the buyer in its regulatory filing, but it was widely reported and later confirmed by Musk to be Tesla.
• This marks the largest single customer contract in Samsung’s foundry history, boosting hopes for its Texas plant and foundry operations.
• The agreement runs from July 2025 to December 2033, covering production of Tesla’s AI6 chip line.
• Manufacturing will take place at Samsung’s Taylor, Texas fabrication plant, dedicated exclusively for Tesla’s chips.
• Musk said Tesla will help optimize manufacturing, noting he plans to “walk the line personally” and highlight the facility’s proximity to his home.
• Musk also suggested that the actual production and revenue could greatly exceed the $16.5 billion baseline figure.
• For Samsung, the deal provides a major customer for its underutilized U.S. foundry, potentially improving yields and credibility against For Tesla, securing a domestic supplier helps reduce supply chain risk and supports its future in autonomous driving, humanoid robotics (Optimus) and AI infrastructure (Dojo).
• Samsung shares rose about 6–7% in Seoul trading following the announcement, while Tesla shares also gained over 4%.

Production of earlier Tesla chips (AI4) is already handled by Samsung; meanwhile, TSMC is manufacturing AI5 in Taiwan and Arizona before AI6 transitions to Samsung’s Texas plant Analysts expect mass production of AI6 to begin around 2027–2028, following AI5 deployment by end 2026. The deal may also align with broader U.S.–South Korea tech cooperation, including funding under the U.S. CHIPS Act, and efforts to reduce trade tensions and tariffs.