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Tesla Strikes $16.5 Billion Chip Deal with Samsung to Boost AI Chip Production

By  |  July 28, 2025

Tesla has inked a multibillion-dollar agreement with Samsung Electronics to supply next-generation semiconductor chips, a strategic move poised to invigorate Samsung’s struggling chip foundry operations. The $16.5 billion deal marks a significant milestone for both companies, according to Reuters.

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    The agreement designates Samsung’s new chip fabrication plant in Taylor, Texas, as the production site for Tesla’s forthcoming AI6 chip, intended to power future advancements in the automaker’s artificial intelligence technologies. The deal comes at a pivotal time for Samsung, which has faced mounting challenges in attracting major clients to its foundry business.

    Samsung’s stock surged as much as 6.8% following the announcement, reaching its highest level since September of the previous year. Meanwhile, Tesla shares climbed 1.9% in premarket trading in the U.S., Reuters reported.

    The Taylor facility, which has encountered multiple delays and setbacks since its inception, had previously struggled to secure anchor clients. Per Reuters, Samsung had even deferred deliveries of advanced chipmaking machinery from ASML due to a lack of committed orders. The factory’s operational timeline has already been pushed back to 2026.

    Read more: Tesla Faces Renewed Class Action Over Repair and Parts Monopoly

    Industry experts view the Tesla deal as a critical lifeline. “So far [the Taylor fab] had virtually no customers, so this order is quite meaningful,” said Ryu Young-ho, a senior analyst at NH Investment & Securities, according to Reuters.

    Although a definitive schedule for AI6 chip production has not been disclosed, Tesla CEO Elon Musk has indicated that production of the preceding AI5 chips is set to begin in late 2026. Based on that timeline, analysts like SK Securities’ Lee Dong-ju predict AI6 production could start around 2027 or 2028. However, Musk’s companies have often faced delays in meeting production targets, as noted by Reuters.

    Samsung already manufactures Tesla’s current AI4 chips, which underpin the automaker’s Full Self-Driving driver assistance system. While Samsung will now handle the AI6 line, Taiwan’s TSMC is expected to produce the AI5 chips, initially in Taiwan and eventually in Arizona, according to previous statements by Musk.

    Source: Reuters