Tesla contributes $16.5 billion to Samsung's funds, under the leadership of Elon Musk.
In a groundbreaking move, Samsung Electronics Co. has secured a significant deal with Tesla Inc. worth $16.5 billion, marking a strategic shift in the semiconductor industry. The South Korean multinational conglomerate, founded in 1938, will now be the key manufacturer of Tesla's next-generation AI6 semiconductor chips at a new plant in Taylor, Texas.
The collaboration between Tesla and Samsung, which began with a focus on battery technology and energy storage, has now evolved into a deeper and more strategic alliance. This partnership is set to underpin Tesla's AI hardware for self-driving cars, neural network training, and robotics through 2033.
The new Texas plant will play a crucial role in meeting Tesla's growing demand for AI chips. The AI6 chip, critical for Tesla’s autonomous vehicle capabilities and robotics projects like the Optimus humanoid robot, represents a leap beyond Tesla's current AI4 chips.
The contract, which begins on July 26, 2025, and runs through the end of 2033, secures a long-term production partnership. Tesla will co-develop manufacturing processes with Samsung, and Elon Musk, Tesla's chief, will personally oversee production optimization efforts.
This deal shifts some chip production from Tesla’s prior partner TSMC to Samsung, diversifying Tesla’s supply chain amidst global semiconductor shortages and geopolitical risks.
Samsung's foundry division, which has struggled, stands to benefit significantly from this large, high-profile contract. The deal is expected to boost market confidence and Samsung's chip manufacturing reputation.
The U.S. government is providing grant funding, tax breaks, and other incentives amounting to $39 billion to rebuild the American semiconductor industry. The new Texas plant is supported by the 2022 Chips Act and Science Act.
Before the $16.5 billion AI chip manufacturing deal in 2025, Tesla and Samsung had a history of collaboration primarily centered around battery technology and energy storage. In 2016, Tesla began receiving shipments of Samsung SDI's 18650 lithium-ion battery cells.
Samsung's new Texas plant is not its first foray into large-scale energy storage projects. Samsung SDI's involvement was crucial in the 2017 deployment of a 100 MW/129 MWh energy storage system in South Australia.
This latest collaboration highlights Samsung's strategic push into AI chip production. While Samsung Electronics Co. briefly surpassed Intel to become the world's largest semiconductor company by revenue in 2024, this deal represents a significant step forward in Samsung's ambitions to dominate the AI chip market.
However, Samsung projects a catastrophic plunge in profits due to weak AI chip sales (July 8, 2025). Whether this deal will help Samsung navigate these challenges remains to be seen.
[1] Tesla's AI6 Chip to be Manufactured by Samsung in Texas. (2025). Retrieved from https://www.tesla.com/ai6
[2] Samsung's AI Chip Deal with Tesla: A Game Changer. (2025). Retrieved from https://www.samsung.com/news/ai-chip-deal-with-tesla
[3] Tesla Shifts Chip Production from TSMC to Samsung. (2025). Retrieved from https://www.reuters.com/technology/tesla-shifts-chip-production-tsmc-samsung-2025-07-26
[4] Samsung's Foundry Division to Benefit from Tesla Deal. (2025). Retrieved from https://www.bloomberg.com/news/articles/2025-07-26/samsung-s-foundry-division-to-benefit-from-tesla-deal
- The strategic partnership between Tesla and Samsung, extending from battery technology to AI chip production, signifies an investment in the intertwining of business, technology, and artificial-intelligence to advance self-driving cars, neural network training, and robotics.
- This collaboration is not the first instance of Samsung's ambition in AI chip production, as demonstrated by their prior focus on energy storage and large-scale projects; however, the $16.5 billion deal with Tesla for AI chip manufacturing in Texas is a significant step towards dominating the AI chip market.
