Billionaire Elon Musk has confirmed that Tesla will source $16.5 billion (about £12.8 billion) worth of chips from Samsung Electronics until 2033, marking a major win for the South Korean firm’s struggling chip foundry business.
Tesla has signed a $16.5 billion (about £12.8 billion) agreement with Samsung Electronics for a long-term supply of advanced automotive chips, Elon Musk said on Monday, in a deal expected to stabilise Samsung’s embattled contract chipmaking unit.
Musk said the chips, designated AI6, would be produced at Samsung’s forthcoming fab in Taylor, Texas.
“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,” he wrote on social media platform X.
Samsung confirmed the deal earlier on Monday without naming the client, citing confidentiality requests. However, three sources briefed on the matter told Reuters the customer is Tesla. Samsung shares jumped more than 4% after the announcement.
The agreement will run until the end of 2033 and is seen as a strategic boost to Samsung’s foundry operations, which have lost ground to Taiwanese rival TSMC. Analysts estimate the unit incurred losses exceeding 5 trillion won (about $3.63 billion) in the first half of 2025.
The foundry has been losing customers such as Apple and Nvidia to TSMC due to lagging yields in advanced chip nodes. Industry analysts said the Tesla deal will help reduce these losses, although the chips involved are unlikely to use Samsung’s cutting-edge 2-nanometre technology.
“Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency,” Musk said, adding he would personally oversee progress at the plant, located near his residence.
The chip partnership may also carry geopolitical weight. South Korea is pursuing closer U.S. industrial ties, including in chipmaking and shipbuilding, as it negotiates to avoid possible 25% tariffs on key exports.
Samsung is the world’s largest maker of memory chips but continues to trail TSMC in logic chip manufacturing. Analysts say the Tesla contract, while not enough to reverse Samsung’s market position, could restore investor confidence as it seeks to win back high-profile clients.
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