The $16.5 billion chip supply agreement between Tesla and Samsung Electronics strengthens the South Korean firm’s contract chipmaking unit to achieve parity with industry leaders. The production of Tesla’s next-generation AI6 processors and other chips will occur at Samsung’s Taylor Texas manufacturing facility.
During Monday’s announcement Tesla CEO Elon Musk confirmed the deal while stating the company would optimize chip production and he would personally supervise the Taylor facility near his home. The $16.5 billion represents an initial projection which may not reflect the actual production volume.
The agreement led to a significant increase in Samsung stock prices which reached their highest point since September 2024 by rising almost 7%. Tesla stock prices increased by 1.9% during the premarket U.S. trading session.
The partnership brings new optimism to Samsung’s foundry business after the company faced delays at Taylor and failed to secure major clients. The plant’s initial production timeline now extends to 2026 because Samsung postponed chip equipment deliveries due to insufficient major orders.
The agreement remains unconnected to current U.S.-South Korea trade negotiations but it provides Seoul with additional bargaining power to prevent 25% U.S. tariffs. The agreement represents a crucial victory for Samsung in its intense competition to develop AI chips.
