Samsung Lands $16.5B Tesla Deal to Build AI6 Chips in Texas

Samsung Inks $16.5 Billion Chip Contract With Tesla to Build AI6 Processors at Texas Plant, Aiming for Foundry Comeback in Global AI Race

Samsung Electronics has inked a $16.5 billion deal with Tesla Inc. to produce its future-generation AI6 chips. The agreement will last almost a decade, from July 2024 through the end of 2033. These chips will be made at Samsung’s new chip fabrication facility in Taylor, Texas, which will start operations in the second half of 2026.

Although Samsung initially steered clear of referring to Tesla out of confidentiality concerns, Elon Musk acknowledged it on X. He described the deal as ‘strategically massive’ and stated that the actual production could be ‘several times higher’ than quoted.




Why This is a Big Win for Samsung’s Foundry Business

The company is the most prominent memory chip manufacturer globally, but has been losing out in the foundry business. Its foundry business, which produces chips for other firms, has been incurring losses for some quarters, more than $3.6 billion in the first half of 2025 alone.

The Tesla agreement introduces valuable business to the unit. It will likely yield Rs. 20,800 crore annually, 10% of Samsung’s yearly foundry income. This might permit the firm to use its production lines better and decrease its reliance on memory chips, which are more exposed to market volatility.

What is Elon Musk’s Role in Production?

Musk indicated that he would be directly involved in the production of chips. He would personally visit the chip fabrication line and help Samsung optimize efficiency. The location of the Texas fab, near his residence, makes such an engagement convenient.

The company currently employs Samsung’s AI4 chip. It will temporarily shift to AI5, from TSMC, before opting for AI6 from Samsung. This represents Tesla’s aggressive push in AI but highlights compatibility and consistency issues in the rollout of self-driving tech.

What This Means for the Global Chip Market

This agreement is a big chance for Samsung to re-enter the high-end chip manufacturing race, led by Taiwan Semiconductor Manufacturing Co. (TSMC) at present. TSMC has 67.6% of the global foundry market; Samsung has only 7.7%.

The victory of Samsung over Tesla might indicate that its 2-nanometer chip technology is competitive now. The agreement could persuade more customers seeking alternatives to TSMC, particularly in AI.

How the Deal Impacts Samsung’s Texas Plant

Samsung’s $37 billion facility in Taylor, Texas, had languished because of the lack of large contracts. This Tesla deal gives it a definite direction. The firm is now accelerating recruitment and equipment imports to fulfill production timelines.

The deal also deepened Samsung’s connections to the US semiconductor chain, as Washington provided incentives and subsidies to chipmakers investing on US soil.

What’s Next for Samsung?

This agreement will not cure all of Samsung’s problems, but it provides the company with a solid foundation for its future. Success with Tesla may lead to other big clients such as Nvidia, Amazon, or Google, all competing to produce sophisticated AI chips.

According to one analyst, “This is more than an agreement. It’s Samsung’s opportunity to show that it can take charge of the AI chip age.