Elon Musk on Monday made a huge announcement saying that the electric vehicle maker Tesla has signed a $16.5 billion deal with Samsung Electronics. The deal has been signed to source next-generation AI chips and is seen as a major push to Samsung’s struggling contract chip manufacturing business.
AI Chips To Be Produced At Samsung’s Texas Semiconductor Plant
Samsung’s shares surged by up to 6.8%, following the news of the deal which is their highest level since September 2023.
Musk said the chips will be produced at Samsung’s new semiconductor plant in Taylor, Texas. The facility will manufacture Tesla’s upcoming AI6 chip, part of the automaker’s advanced driver assistance technology.
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“Samsung agreed to allow Tesla to assist in maximizing 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,” Musk said in a post on X on Monday.
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
In a separate post, he added, “the $16.5B number is just the bare minimum. Actual output is likely to be several times higher.”
Next Gen Samsung A15 Chips To Be ready By End of 2026
The deal is seen as important for Samsung’s Taylor plant, which has struggled to attract major clients. In October, Reuters reported that Samsung had delayed receiving ASML chipmaking equipment for the site due to a lack of confirmed orders. The start of operations at the plant has already been pushed back to 2026.
While Tesla has not provided a specific timeline for production of the AI6 chip, Musk previously mentioned that the next-generation A15 chips would be ready by the end of 2026. This suggests that AI6 chips may follow in subsequent years.
Currently, Samsung manufactures Tesla’s A14 chips, which are used in its Full Self-Driving (FSD) driver assistance system. Meanwhile, TSMC is set to produce Tesla’s AI5 chips, first in Taiwan and then in Arizona.
Samsung World’s Largest Chipmaker
Samsung is the world’s largest memory chipmaker, but its share in the global foundry business remains modest. The company holds just 8% of the market compared to TSMC’s dominant 67%, according to data from market research firm Trendforce.
The Texas fab is a key part of Samsung Chairman Jay Y. Lee’s push to expand the company’s presence in the contract chip manufacturing sector, beyond its core memory business.
Samsung had initially announced the $16.5 billion chip order without naming the customer, citing confidentiality agreements. However, three sources briefed on the matter told Reuters that Tesla is the client.
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Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
