Samsung Electronics has clinched a groundbreaking $16.5 billion deal to manufacture Tesla’s next-generation AI chips, known as AI6, at its Texas facility.
Tesla CEO Elon Musk confirmed on X (formerly Twitter) that Samsung’s chip plant in Taylor, Texas, will focus exclusively on producing the AI6 chips. This announcement came shortly after Samsung disclosed a significant foundry contract with a global client it did not name. Musk also revealed that Samsung currently makes Tesla’s AI4 chips, while TSMC handles the AI5 chips in Taiwan and Arizona. Samsung’s regulatory filings confirmed the $16.5 billion deal, which extends through 2033 and accounts for 7.6% of Samsung’s forecasted 2024 revenue. Musk described the deal as “just the bare minimum,” hinting at a possible rise in total contract value. The Texas facility aims to begin mass production in the latter half of 2026.
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.
Samsung currently makes AI4.
TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.
— Elon Musk (@elonmusk) July 28, 2025
Tesla Contract Boosts Samsung’s Foundry Business Amid Losses
Samsung’s stock jumped 6.83%, closing at 70,400 won — a near one-year high — following the Tesla deal announcement. The contract comes as a significant boost to Samsung’s foundry division, which has suffered large annual losses and dragged overall profits down. In its latest earnings guidance, Samsung reported an operating profit of 4.6 trillion won ($3.32 billion) for Q2 2025, down nearly 50% year-over-year. The Device Solutions division earned less than 1 trillion won, while the foundry and logic chip operations alone are projected to post losses around 2 trillion won. Amid speculation about spinning off its foundry business, Samsung Chairman Lee Jae-yong dismissed the idea, stating he has “no interest” in such a move.
Industry Experts See Tesla Deal As A Vote of Confidence
Analysts view the Tesla contract as a strong endorsement of Samsung’s chip-making expertise. Despite trailing behind TSMC, which controls 67.6% of the global foundry market compared to Samsung’s 7.7%, experts suggest this deal could lure more clients to Samsung’s 2-nanometer process technology.
Lee Jong-hwan, a semiconductor professor at Sangmyung University, said, “The latest contract is significant as the chip giant has been struggling with heavy losses in the foundry business. Winning an order from a major company like Tesla suggests strong trust in Samsung’s technology.” He added, “This could pave the way for other big tech companies to place orders as well.”
Key Highlights Of The Deal
- Deal Value: $16.5 billion
- Product: Tesla AI6 chips
- Location: Samsung Texas fab, Taylor, Texas
- Contract Duration: Through 2033
- Impact on Samsung Revenue: 7.6% of projected 2024 revenue
- Mass Production Start: Second half of 2026
- Samsung Stock Reaction: +6.83%, closing at 70,400 won
- Foundry Market Share: Samsung 7.7%, TSMC 67.6%
(From ANI)
Also Read: Tesla Signs $16 Billion Deal With Samsung To Build AI Chips In Texas, Elon Musk Confirms
