Tesla Signs $16.5 Billion Chip Deal with Samsung to Power Next-Gen AI Plans

Tesla has signed a $16.5 billion deal with Samsung Electronics for the production of next-generation AI6 chips, CEO Elon Musk confirmed on Sunday. The chips will be manufactured at Samsung’s chip plant in Taylor, Texas—a project that has faced setbacks due to a lack of major clients until now.

The partnership marks a significant win for Samsung‘s struggling foundry business, which has trailed behind rivals like TSMC. Shares of Samsung rose nearly 7% on Monday following the announcement, as investors welcomed the long-awaited order. Despite the market optimism, analysts say the deal is unlikely to improve Tesla‘s short-term issues, such as falling EV sales or delays in its robotaxi rollout.

Musk stated that the AI6 chips are intended for Tesla’s self-driving vehicles and humanoid robots, adding that they may also serve wider AI applications due to their advanced computing power. He emphasized the partnership’s operational proximity: “The fab is conveniently located not far from my house,” he posted on X.

Samsung currently supplies Tesla’s AI4 chips used in Full Self-Driving (FSD) systems. TSMC is expected to produce the upcoming AI5 chips, set to begin by late 2026, suggesting AI6 chips may only be ready by 2027 or later.

While the timeline for AI6 production remains unclear, analysts believe the deal could reduce financial losses for Samsung’s chip foundry division, estimated at over $3.6 billion in just the first half of 2025. A senior South Korean trade official denied the chip deal was directly linked to ongoing trade negotiations with the U.S., despite the growing push for semiconductor collaboration.

Samsung holds only 8% of the global foundry market, compared to TSMC’s 67%, according to Trendforce. Industry experts view the Tesla deal as a crucial step in Samsung Chairman Jay Y. Lee’s long-term goal of becoming a top player in contract chip manufacturing.

(With inputs from agencies)