Samsung Electronics has finalised a multibillion-dollar semiconductor manufacturing agreement, reportedly worth $16.5 billion, with Tesla. The contract involves the production of Tesla’s next-generation AI6 chips and marks one of the largest semiconductor deals in Samsung’s history. The chips will be produced at Samsung’s upcoming advanced fabrication facility in Taylor, Texas.

Spanning eight years and extending through 2033, the agreement underscores Tesla’s strategic focus on AI hardware development, while boosting Samsung’s position in the highly competitive foundry market. The deal is seen as a major milestone for Samsung Foundry, potentially contributing over 7% of the company’s total revenue in 2024 alone.

Tesla CEO Elon Musk confirmed that the new Texas facility will be dedicated to producing the AI6 chip. He emphasised the strategic value of the partnership and revealed that Tesla will be directly involved in refining production efficiency. Musk also committed to personally overseeing progress at the Texas plant, highlighting the importance of the project to Tesla’s AI roadmap.

The AI6 chip represents Tesla’s most advanced custom silicon to date and is expected to play a pivotal role in powering the company’s autonomous driving systems, robotics (including the Optimus humanoid robot), and future AI training infrastructure. Tesla’s chip development strategy has seen a clear progression: Samsung is currently manufacturing the AI4 chip, TSMC is slated to handle AI5 production, and now the AI6 chip will be brought to life in Samsung’s U.S. facility.

Samsung’s Taylor fab, located near Austin, had faced uncertainty in recent months due to construction delays and a lack of confirmed anchor clients. The Tesla agreement now positions it as a key player in the global semiconductor race. Operations at the facility are scheduled to commence in 2026.

This deal arrives at a critical moment for Samsung’s semiconductor division, which has faced financial pressure due to ongoing development costs and lower yield rates in advanced process nodes. The AI6 chip will be manufactured using Samsung’s upcoming 2-nanometer process, a significant technological leap that places it in direct competition with industry leader TSMC.

While full-scale production of the AI6 chip may not begin before 2028 due to the time required to optimise yields, the agreement cements Samsung’s long-term role in Tesla’s vertically integrated AI hardware ecosystem. It also strengthens U.S.–South Korea technological cooperation in a climate of growing geopolitical emphasis on semiconductor independence.

For Tesla, the deal ensures a secure and dedicated supply chain for its critical AI hardware components, supporting the company’s ambitions to expand its AI capabilities across automotive and non-automotive domains.

The Samsung–Tesla partnership marks a significant advance in global semiconductor manufacturing and AI development. It not only revitalises Samsung’s Texas project but also signals the intensifying competition among leading chipmakers to secure the future of artificial intelligence.

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