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Tesla boss Elon Musk has confirmed that the electric vehicle maker will partner with Samsung Electronics to produce its next-generation AI6 chips, as part of a major $16.5 billion (£12.8 billion) deal that will span the next eight years.
Samsung announced the agreement on Monday in a regulatory filing, referring to the unnamed client only as a “major global company.” However, Musk later revealed on social media platform X (formerly Twitter) that Tesla is indeed the company behind the deal.
“The strategic importance of this is hard to overstate,” Musk said, noting that Samsung’s expansive new chip manufacturing facility in Texas will be dedicated to producing Tesla’s AI6 chips. The agreement, which came into effect last Thursday, will run through to the end of 2033.
Musk also shared that Tesla will play an active role in streamlining the chip-making process. “Samsung agreed to allow Tesla to assist in maximising manufacturing efficiency — a critical point in striking the deal,” he stated, adding that he would personally oversee progress at the site, which he described as being conveniently located near his home.
Despite Musk’s public comments, Samsung declined to confirm Tesla as the client, citing commercial confidentiality. Nevertheless, the South Korean firm said the deal accounts for around 7.6 percent of its projected sales for 2024.
The agreement comes at a crucial time for Samsung, whose foundry division — responsible for contract manufacturing of semiconductors — has been underperforming relative to competitors such as SK hynix and Taiwan’s TSMC. Analysts see the Tesla deal as a potential game-changer for Samsung’s push into the high-demand AI chip market.
Earlier this month, Samsung warned that its operating profit was expected to drop by 56 percent year-on-year and 31 percent compared to the previous quarter. The company attributed the decline to ongoing struggles within its semiconductor business, particularly the foundry segment.
Samsung Electronics is the crown jewel of the Samsung Group, South Korea’s largest chaebol — a powerful family-run conglomerate that remains a central force in the country’s economy.
