SEOUL, Tesla CEO Elon Musk has confirmed a US$16.5 billion chip supply agreement with Samsung Electronics, marking a significant boost for the South Korean tech giant’s foundry business, which has been grappling with losses.
The announcement drove Samsung’s shares up by as much as 6.8%—their highest level since September last year—while Tesla shares rose 1.9% in U.S. premarket trading.
Under the deal, Samsung’s chip fabrication plant in Taylor, Texas will produce Tesla’s next-generation AI6 chip. The project had faced delays due to Samsung’s struggle to attract major clients. Musk noted on social media platform X that Tesla will collaborate closely with Samsung to optimize manufacturing efficiency, even saying he would “personally walk the line” to speed up progress. He added that the US$16.5 billion figure is only a baseline, with actual output potentially “several times higher.”
Industry analysts highlighted the significance of the deal. Ryu Young-ho of NH Investment & Securities said the Taylor plant had previously lacked major clients, making this order a breakthrough for Samsung. In late 2023, Reuters reported that Samsung delayed taking delivery of chipmaking equipment from ASML due to the absence of key customers, pushing the plant’s operational date to 2026.
Although no official production timeline for the AI6 chip was disclosed, Musk previously said Tesla’s AI5 chips would be produced by the end of 2026, indicating AI6 could follow in 2027 or 2028. Samsung currently produces Tesla’s AI4 chips, used in its Full Self-Driving system, while rival TSMC is expected to manufacture the AI5 chips in Taiwan and later in Arizona.
Samsung, the world’s top memory chipmaker, is seeking to expand into contract chip production through its foundry division. However, it holds just 8% of the global foundry market compared to TSMC’s dominant 67%, according to TrendForce.
Samsung initially announced the US$16.5 billion deal without naming the client due to confidentiality clauses. However, Reuters confirmed through sources that Tesla is the recipient.
The agreement comes at a critical time for Samsung, which is under pressure in the AI chip space and is set to report earnings soon. Earlier this month, the company forecast a 56% year-on-year decline in Q2 operating profit, partly due to a struggling foundry business estimated to have posted losses exceeding 5 trillion won (US$3.6 billion) in the first half of 2025.
Analysts say the Tesla deal could help reduce those losses and signal a turning point for Samsung’s efforts to close the technological gap with TSMC. Still, questions remain over whether the agreement ties into broader U.S.–South Korea trade talks, as Seoul continues efforts to avoid potential 25% U.S. tariffs by deepening chip and shipbuilding partnerships.
($1 = 1,378.70 won)
