Next-Gen Tesla Chips to be Built by Samsung in New Deal

Tesla and Samsung have inked a $16.5 billion USD (around $21.9 billion CAD) deal to produce next-gen AI chips for the EV manufacturer.

The multi-year deal was announced by the South Korean company early Monday. Running from now until the end of 2033, Samsung will be producing Tesla’s next-gen AI6 chips at an upcoming plant in Taylor, Texas. Tesla CEO Elon Musk confirmed this news on X (formerly Twitter).

“The strategic importance of this is hard to overstate,” Musk said on X. He continued to state that the value of the agreement is “just the bare minimum. Actual output is likely to be several times higher.” The Tesla CEO also stated that he will walk the chip fabrication line himself. Apparently, he has also been authorized by Samsung to assist in optimizing production.

Currently, Samsung manufactures the AI4 chipset for Tesla. However, TSMC is making the AI5. Musk confirms that the design has recently been finalized. Production of the AI5 chip is initially starting in Taiwan and then moving to Arizona. The next-gen AI6 chip will be the backbone of the company’s vehicles over the course of the next few years.

“Since the main contents of the contract have not been disclosed due to the need to maintain business confidentiality, investors are advised to invest carefully, considering the possibility of changes or termination of the contract,” Samsung says.

Following the announcement of the deal, Samsung’s shares have risen over 6 percent. The company experienced the highest level since September 2024. The deal also arrives days before Samsung is set to announce its earnings on Thursday, July 31. According to Reuters, “Samsung projected a 56% drop in second-quarter operating profit, partly due to widening losses of its foundry business,” earlier this month.