Samsung secures $16.5 billion deal with Tesla to manufacture next-gen AI Chips

By Staff Report July 28, 2025 3:35 pm IST

Samsung to build Tesla’s AI6 chips in Texas, marking a major step in autonomous tech and U.S.-based chip production.

Samsung Electronics has landed a monumental deal worth ₩22.76 trillion (approximately $16.5 billion) to manufacture advanced 2-nanometer semiconductors, as disclosed in a recent filing by the South Korean tech giant. The CEO, Elon Musk, confirmed the details on the social media platform X.

Musk announced that the upcoming Samsung foundry in Taylor, Texas, will manufacture Tesla’s next-generation AI6 chips. These chips will power Tesla’s autonomous driving technology and represent a significant advancement in the company’s vertical integration strategy. The new factory is expected to support Tesla’s long-term goal of securing an in-house supply of AI chips, which are essential for developing its Full Self-Driving system.

This deal marks Samsung’s largest ever foundry order, accounting for approximately 7.6% of the company’s projected revenue for 2024. Samsung has indicated that the contract will extend until 2033, providing a substantial financial boost to its foundry business. Following the announcement, Samsung’s shares surged, rising by as much as 6.8%.

In a series of posts on X (formerly Twitter), Musk expressed his enthusiasm for the partnership, stating, “Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency. This is a critical point, as I will personally oversee efforts to accelerate the pace of progress.”

While the production timeline for the AI6 chips remains uncertain, analysts anticipate that production will begin around 2027 or 2028. Currently, Samsung manufactures Tesla’s AI4 chips, which are responsible for powering the company’s Full Self-Driving driver assistance system. TSMC is set to produce the AI5 chips, with production expected to commence in Taiwan by 2026, followed by expansion to Arizona.

This new partnership will give Tesla a greater control over its chip production. It will also help Samsung strengthen its position in the highly lucrative semiconductor manufacturing market. As construction of the Taylor facility progresses, the deal between Samsung and Tesla is likely to have lasting implications for the future of AI-driven technologies in the automotive industry.