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Tesla Signs USD 16.5 Billion Chip Deal With Samsung, Boosting Foundry Prospects

  • tech360.tv
  • Jul 29
  • 2 min read

Tesla has signed a USD 16.5 billion chip supply deal with Samsung Electronics, a move that could revive the South Korean firm's struggling contract chipmaking business.


Credit: TESLA
Credit: TESLA

Tesla Chief Executive Elon Musk said Samsung’s new chip plant in Taylor, Texas, will manufacture Tesla’s next-generation AI6 chips. These chips are expected to power Tesla’s self-driving vehicles and Optimus humanoid robots.


Samsung shares rose 6.8% on Monday following the announcement, as investors bet the deal would strengthen the company’s position in the artificial intelligence chip market, where it trails Taiwan Semiconductor Manufacturing Co. (TSMC).


Despite the size of the deal, production is still years away. Musk previously said Tesla’s AI5 chips would begin production by the end of 2026, suggesting AI6 chips would follow in 2027 or 2028. Analysts noted Tesla has a history of missing production targets.


Tesla factory exterior with large logo, parking lot, and a red car. Clear sky and trees enhance the industrial, modern setting.
Credit: TESLA

Tesla shares also climbed 4.2% on Monday, though the deal is not expected to address the company’s immediate challenges, including declining electric vehicle sales and delays in its robotaxi rollout.


Samsung currently produces Tesla’s AI4 chips, which power its Full Self-Driving driver assistance system. TSMC is set to manufacture the AI5 chips, initially in Taiwan and later in Arizona.


Musk said Tesla will help Samsung maximise manufacturing efficiency at the Texas facility, which is located near his residence. He added that the USD 16.5 billion figure is a minimum and that actual output could be several times higher.


The Taylor plant has faced delays and lacked major clients. In October, Samsung postponed deliveries of ASML chipmaking equipment due to the absence of confirmed orders. The plant’s operational start has been delayed to 2026.


Ryu Young-ho, a senior analyst at NH Investment & Securities, said the Tesla order is significant for Samsung, which had “virtually no customers” for the Taylor factory. However, the deal may still represent a small portion of Samsung’s annual logic chip revenue.


Samsung’s foundry business, which produces logic chips designed by clients, is a key part of Chairman Jay Y. Lee’s strategy to diversify beyond memory chips. The company holds just 8% of the global foundry market, compared to TSMC’s 67%, according to Trendforce.


Pak Yuak, an analyst at Kiwoom Securities, said the Tesla deal could help reduce losses in Samsung’s foundry division, which he estimates exceeded 5 trillion won (USD 3.6) in the first half of the year.


It remains unclear whether the deal is linked to ongoing trade talks between South Korea and the United States. A South Korean trade ministry official said the agreement was not known to be part of the negotiations.

  • Tesla signs USD 16.5 billion chip deal with Samsung for AI6 production

  • Samsung’s Texas plant to manufacture chips for self-driving and robotics

  • Production expected post-2026, with AI5 chips starting first


Source: REUTERS

 
 
 

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