Tesla Taps Samsung's Texas Factory to Build Next-Gen AI6 Chip in $16.5B Deal, Says Elon Musk

On July 27, 2025, Tesla CEO Elon Musk announced on X that Samsung's factory in Taylor, Texas, would produce Tesla's next-generation AI6 chips. The announcement triggered a positive market reaction, with Samsung Electronics' stock rising by more than 6%.

In his X post, Musk stated, "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. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona." A follow-up post on July 27, 2025, at 23:36 EDT, added, "Samsung agreed to allow Tesla to assist in maximizing 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 ." Musk further clarified the deal's value on July 28, 2025, at 02:06 EDT, noting, "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher."

A multi-billion-dollar semiconductor foundry production and supply contract between Tesla and Samsung, effective from April 24, 2023, to December 31, 2033, underpins the partnership. Samsung Electronics will supply chips to Tesla in a multi-year deal valued at $16.5 billion—a figure Musk described as "just the minimum amount"—marking the largest single-customer contract in Samsung's semiconductor division, per Forbes. The agreement allows Tesla to collaborate on-site to enhance manufacturing efficiency, as Musk noted in his X post.

Industry observers view the deal as a significant step for Samsung's foundry business, which has struggled to compete with TSMC in the AI chip market. "This shows that Samsung Electronics has been elevated from a simple chip supplier to Tesla's next-generation AI computing partner. Beyond simply making a generation higher chips than TSMC, they are in a position to preempt technology trends," an industry insider told Maeil Business.

Tesla designed the AI6 chip to support autonomous driving functions in its electric vehicles and to scale for use in humanoid robots and AI data centers. The company has planned the next two generations of its autonomous computer, with the AI6 chip expected to begin equipping vehicles in 2027. Samsung's semiconductor factory in Taylor, Texas, where production is scheduled to commence next year, aligns strategically with Tesla's headquarters in Austin, Texas.

Samsung's move into foundry chip manufacturing is part of a broader strategy to expand beyond its stronghold in memory semiconductors. The multi-year contract with Tesla, estimated at 22.76 trillion won, is projected to account for approximately 7.6% of Samsung Electronics' annual sales for 2024. The company aims to secure additional global big tech customers, such as Qualcomm and NVIDIA, amid rising demand for artificial intelligence semiconductors.

Samsung Foundry has faced yield degradation issues since the 5-nanometer process and recorded annual losses of tens of trillions of won. The Tesla contract renews hopes for a turnaround at the delayed Texas factory. "The fact that Samsung Foundry, which has been questioned for its competitiveness, has achieved the result of winning the Tesla chip order is a positive signal. As demand for artificial intelligence-related semiconductors continues to increase, this contract acts as a favorable wind, increasing the possibility of additional orders," said Kim Yang-pyung, a senior researcher at the Korea Institute for Industrial Economics and Trade.

Originally published on Tech Times