Tesla (TSLA) Confirms $16.5 Billion Chip Supply Deal with Samsung
Tesla (TSLA) has officially confirmed a landmark $16.5 billion chip supply agreement with Samsung Electronics, marking one of the largest foundry contracts in the automotive sector to date. The deal, running through 2033, will focus on Tesla’s next-generation AI6 chips used in autonomous driving systems.
🔧 Key Highlights
- Client Confirmed: Elon Musk confirmed Tesla is the customer behind the multibillion-dollar contract initially disclosed anonymously by Samsung.
- Production Site: The chips will be manufactured at Samsung’s fabrication plant in Texas, which Musk says will be dedicated solely to Tesla’s AI6 chip production.
- Musk’s Involvement: Musk stated he will personally oversee operations to accelerate manufacturing progress, highlighting the fab’s close proximity to his home.
- Product Focus: The deal centers on AI6 processors critical to Tesla’s autonomous driving and robotics ambitions.
📉 Context & Strategic Implications
- Foundry Struggles: Samsung’s foundry business has posted significant losses, estimated at around 5 trillion won (~$3.6 billion) in the first half of 2025. The Tesla contract is seen as a vital win to improve utilization and restore confidence.
- Not the Most Advanced Node: The deal reportedly does not involve Samsung’s cutting-edge 2nm technology, due to yield challenges, but still represents a major step forward in automotive chip development.
- Global Trade Impact: The partnership strengthens U.S.–South Korea industrial ties amid ongoing discussions over potential U.S. tariffs on Korean chip and ship exports.
📊 Market Reaction
- Samsung Stock: Shares in Samsung Electronics surged up to 3.5% intraday on the Seoul exchange after the announcement.
🧾 Summary Table
| Topic | Details |
|---|---|
| Deal Value | $16.5 billion |
| Client | Tesla |
| Duration | Through 2033 |
| Chip Focus | AI6 processors for autonomous vehicles |
| Manufacturing Site | Samsung’s Texas semiconductor facility |
| Tesla’s Role | Operational collaboration; Musk personally involved |
| Samsung’s Strategy | Addresses losses in foundry unit; bolsters U.S. partnerships |
This move underscores Tesla’s deepening investment in proprietary hardware and Samsung’s aggressive push to close the gap with TSMC (TSM) in high-value chip making. Tesla is up 1.33% to $320.27 in overnight trading after confirming a $16.5 billion chip deal with Samsung. Gains are also supported by broader market strength, as U.S. futures rise on optimism over a U.S.–EU trade agreement.