Tesla has signed a $16.5 billion semiconductor supply deal with Samsung Electronics, according to CEO Elon Musk, in a move set to revitalize the South Korean tech giant’s loss-making contract chipmaking business.
Following the announcement, Samsung shares surged as much as 6.8%, reaching their highest level since September 2023. Tesla shares rose 1.9% in U.S. premarket trading.
The agreement involves production of Tesla’s next-generation AI6 chip at Samsung’s new foundry in Taylor, Texas. The deal could breathe new life into the long-delayed project, which has struggled due to Samsung’s challenges in securing and retaining major clients.
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” Musk posted on X (formerly Twitter) on Monday.
“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 added in a separate post: “The $16.5B number is just the bare minimum. Actual output is likely to be several times higher.”
Analysts see the deal as a major win for Samsung. “Samsung’s Taylor fab so far had virtually no customers, so this order is quite meaningful,” said Ryu Young-ho, senior analyst at NH Investment & Securities.
In October, Reuters reported that Samsung had postponed receiving ASML chipmaking equipment for the Taylor plant, citing the absence of confirmed clients. The launch of operations has already been delayed to 2026.
No specific timeline has been confirmed for AI6 chip production, but Musk has previously stated that the preceding AI5 chips will enter production by the end of 2026, suggesting AI6 chips may follow soon after.
Lee Dong-ju, an analyst at SK Securities, estimates that AI6 production could begin in 2027 or 2028, though Tesla is known for frequently missing its target deadlines.
Currently, Samsung manufactures Tesla’s AI4 chips used in the company’s Full Self-Driving system. Musk has said that TSMC will produce the AI5 chips, starting in Taiwan before moving to Arizona.
The Texas facility represents a central part of Samsung Chairman Jay Y. Lee’s push to diversify the company’s chip business beyond memory and into contract manufacturing.
Samsung is the world’s leading memory chip maker but holds only 8% of the global foundry market, compared to TSMC’s dominant 67%, according to market research firm Trendforce.
Samsung initially announced the $16.5 billion deal without naming the client, citing a request for confidentiality. The agreement, which runs through 2033, was later confirmed by three sources to involve Tesla, according to Reuters.
The partnership comes as Samsung faces rising pressure in the competitive race to produce artificial intelligence chips. The company lags behind rivals such as TSMC and SK Hynix, a gap that has significantly impacted both profits and share performance.
Earlier this month, Samsung projected a 56% year-on-year drop in second-quarter operating profit, partly due to deepening losses in its foundry division.
Pak Yuak, an analyst at Kiwoom Securities, estimates that losses in Samsung’s foundry business exceeded 5 trillion won ($3.6 billion) in the first half of 2025. He believes the Tesla deal could help stem further losses.
Despite the new deal, analysts warn that Samsung continues to face difficulties in retaining major customers, with many opting for TSMC’s more advanced chip technology. TSMC’s client portfolio includes global tech leaders such as Apple, Nvidia, and Qualcomm.
It remains unclear whether the Tesla-Samsung agreement is tied to ongoing trade discussions between South Korea and the United States. Seoul is reportedly seeking closer partnerships in chip and shipbuilding sectors to avert or reduce potential U.S. tariffs of up to 25%.
