Tesla CEO Elon Musk announced a $16.5 billion chip supply agreement with Samsung Electronics, set to run through 2033. This deal positions Samsung’s upcoming semiconductor fabrication plant in Taylor, Texas, as the production hub for Tesla’s next-generation AI6 chip, a critical component in the company’s ambitious push toward autonomous driving, humanoid robotics, and advanced AI applications.
Samsung currently manufactures Tesla’s AI4 chips, which power the company’s FSD system. TSMC is slated to produce the AI5 chips, with production initially taking place in Taiwan and later relocating to Arizona by late 2026. The AI6 chip, expected to enter production in 2027 or 2028, represents the next leap in Tesla’s AI capabilities, supporting unsupervised FSD, Robotaxi fleets, and Optimus robots. Musk has suggested the deal’s value could exceed $16.5 billion, describing it as “just the bare minimum” with actual output potentially “several times higher.”
Following the announcement, Samsung’s Seoul-traded shares surged 6.8%, reaching their highest level since September 2024, while Tesla’s stock rose 1.9% in U.S. premarket trading. The deal has sparked optimism about Samsung’s ability to compete in the AI chip race, where it trails rivals like TSMC and SK Hynix, particularly in high-bandwidth memory (HBM) chips used in AI chipsets.
For Tesla, the deal secures a reliable supply of custom chips essential for its AI-driven future. However, skepticism remains about Tesla’s ability to meet its ambitious timelines, given its history of missing targets. Musk’s prediction of delivering autonomous vehicles at scale by late 2026 or 2027 hinges on the successful execution of this chip strategy.