Catenaa, Monday, July 28, 2025- Samsung Electronics will produce AI semiconductors for Tesla in a new $16.5 billion pact as the electronics maker looks to expand its chipmaking capabilities.
South Korea’s largest company announced on Monday that it secured the $16.5 billion chipmaking agreement, which will run through the end of 2033.
The plan is for an upcoming plant in Taylor, Texas, to produce Tesla’s next-generation AI6 chip, Tesla chief Elon Musk said on X.
“The strategic importance of this is hard to overstate,” the Tesla Chief Executive Officer and X owner wrote.
Musk, 54, will walk the production line himself and has been authorized by Samsung to assist in optimizing production, he said.
The contract win comes as Samsung has been steadily losing ground in chip manufacturing.
The company, which makes its memory chips and also fabricates semiconductors on behalf of clients, has had difficulty bringing in enough orders to fully utilize its foundry capacity.
It has postponed the completion of construction and operational ramp-up of its new Texas fab to 2026.
TSMC held a dominant share of 67.6% of the global foundry market in the first quarter this year, according to Taipei-based TrendForce.
Bloomberg Intelligence said that Samsung Electronics’ new contract to supply semiconductors implies a recovery in its foundry business’s 2-nanometer generation chip production.
The $16.5 billion contract spans 2025-33 and could boost Samsung’s foundry sales by 10% annually.
Samsung and TSMC are both on pace to deliver the next generation of semiconductor advancement, moving to 2-nanometer fabrication, and the new deal is seen as a signal of confidence for the company’s upcoming fabrication technology.
Tesla shares rose by 0.5% on Monday morning, the share is still down by over 20% so far this year.
