Tesla confirms $16.5 billion chip deal with Samsung for AI hardware
Samsung disclosed the contract in a regulatory filing, with the deal taking effect from 26 July 2025 through to 31 December 2033, as reported by CNBC.
While the South Korean firm did not initially identify its partner, Musk later confirmed Tesla's involvement on social media platform X.
'Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip,' Musk wrote, adding that Tesla will assist in improving production efficiency.
'I will walk the line personally to accelerate the pace of progress,' he said, also suggesting the deal's value could exceed the reported figure.
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 😃
— Elon Musk (@elonmusk) July 28, 2025
The agreement marks a significant milestone for both firms. Samsung, which already produces Tesla's AI4 chips, will compete directly with TSMC, which is contracted to manufacture Tesla's AI5 series.
Samsung noted that further details, including the client's identity, would remain confidential until the contract expires, citing trade secret protections. It also cautioned investors that the agreement could be amended or terminated.
The announcement boosted Samsung's share price by more than 6% on Monday - its highest since September 2024. Analysts had previously speculated Tesla was the buyer, with Bloomberg reporting the link ahead of Musk's confirmation.
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
The deal comes as Samsung races to strengthen its position in the AI semiconductor market. The company has pledged to begin mass production of 2-nanometre chips and is aiming to secure major orders for its next-generation process.
Despite these plans, Samsung has struggled to match rivals in high-bandwidth memory (HBM) production.
SK Hynix, currently the leader in HBM technology, is a key supplier to Nvidia, while Samsung's latest version is reportedly delayed until at least September.
Samsung will release its second-quarter earnings on Thursday. Analysts expect profit to more than halve, driven by weak demand in its foundry business and slower progress in AI chip adoption.
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