Samsung Secures $16.5B Tesla Deal to Produce Next-Gen AI6 Chips in Texas

Samsung has struck a major deal with Tesla to produce chips at its new factory in Taylor, Texas. The agreement, valued at $16.5 billion, involves Samsung manufacturing Tesla’s next-generation AI6 chip. It’s a massive win for the foundry division, helping it make a comeback in the semiconductor space.

Samsung wins Tesla chip deal worth $16.5 billion

Samsung is gearing up to start mass production of cutting-edge chips at its Taylor fab next year. The Korean firm is actively seeking big clients so that it can begin operations as planned and avoid any setbacks. Finally, it succeeded in securing a deal with one of its biggest clients — Tesla.

“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,” said Elon Musk, co-founder and CEO of Tesla, on X. Musk further said that he will be visiting the plant personally to accelerate the pace of progress. The goal is to assist the Korean foundry in maximizing manufacturing efficiency.

Note that Samsung already produces AI4 chips for Tesla. However, TSMC walked away with the contract for the more advanced AI5 chips, which recently finished design and will be fabricated in Taiwan and later in Arizona. Thankfully for Samsung Foundry, the AI6 contract brings Tesla back on board.

Speaking of the deal, Samsung recently said (via Bloomberg) that it secured a chipmaking agreement worth $16.5 billion with Tesla, which will run through the end of 2033. Industry analysts expect the AI6 chip to help Samsung compete more effectively with TSMC in the upcoming 2nm era. This deal could increase foundry sales by up to 10% annually as well as pave the way for new contracts with other fabless chip companies.

In recent years, the gap between Samsung Foundry and TSMC has widened greatly in both market share and revenue. As a result, the Korean firm is exploring several strategies to regain a foothold and expand its presence in the semiconductor market. Now, securing a deal with Tesla could be a turning point in its efforts.