Tesla Signs $16 Billion Deal With Samsung for Next-Gen Chips, Says Elon Musk

Electric vehicle giant Tesla has signed a contract with South Korean chipmaker Samsung to manufacture its next-generation AI6 chips in the US, CEO Elon Musk announced on Monday via his social media handle on X.

Musk wrote, “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. Samsung currently makes AI4.”

“Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” he added.

Earlier, the South Korean firm had said it had signed a major contract to supply semiconductor manufacturing services to a large global company, but did not disclose the name of the customer citing "business confidentiality." It did, however, reveal that the deal is worth approximately $16.5 billion, which represents 7.6% of its 2024 revenue.

The agreement is said to cover a nine-year period, from 24 July 2025 to 31 December 2033.

According to reports, the AI6 chip will be used in Tesla’s next-generation Full Self-Driving systems, Optimus humanoid robots, and AI training infrastructure such as the Dojo supercomputer. The company currently uses AI4 chips, which power Tesla’s existing Hardware 4 (HW4) vehicles. An intermediate AI5 chip, produced by TSMC, will be used before the AI6 is fully deployed.

Musk also said on Monday that TSMC, which is currently producing AI5 chips in Taiwan, will soon begin manufacturing them at its Arizona plant.

The deal comes at a crucial time for Samsung, which faces growing pressure in the AI chip race, trailing rivals like TSMC and SK Hynix. This lag has affected both its profits and share price.

While Samsung remains the world’s leading memory chip maker, it also manufactures custom-designed logic chips through its foundry business. However, analysts note that it has struggled to retain major clients, many of whom have shifted to TSMC for more advanced chips. TSMC’s client list includes Apple, Nvidia, and Qualcomm.