Tesla and Samsung Ink $16.5 Billion Chip Deal to Power Next-Gen AI Ambitions

In a landmark move that could reshape the global semiconductor landscape, Elon Musk’s Tesla and South Korean tech major Samsung Electronics have signed a US$ 16.5 billion agreement to produce Tesla’s next-generation AI6 chips, marking a deepening alliance between the electric vehicle giant and the South Korean tech powerhouse.

The chips will be manufactured at Samsung’s new Texas fabrication facility, with production slated to run through 2033. These AI6 chips are designed to power Tesla’s expanding AI ecosystem, including its Full Self-Driving (FSD) systems, Optimus humanoid robots, and AI training infrastructure.

Strategic Synergy

The deal reflects Tesla’s growing push toward vertical integration, allowing it to exert greater control over chip design and manufacturing. Notably, Samsung has agreed to let Tesla assist in optimizing fab efficiency, with Elon Musk reportedly taking a hands-on role in the process.

For Samsung, the partnership offers a much-needed boost to its struggling foundry business, which posted $3.6 billion in losses in the first half of 2025. The company’s global foundry market share had dipped to 7.7%, trailing far behind TSMC’s 67.6%. This deal could help Samsung regain momentum and reinforce its position in the high-stakes AI chip race.

Chip Roadmap

Tesla’s chip strategy has evolved rapidly:

• AI4: Currently in production by Samsung, used in existing FSD systems
• AI5: Designed by Tesla, manufactured by TSMC in Taiwan and Arizona
• AI6: A unified chip for vehicles, robots, and data centers, to be produced by Samsung in Texas

The AI6 chip is expected to consolidate Tesla’s hardware stack across its product lines, reducing reliance on external suppliers like Nvidia.

Market Reaction

The announcement sent Samsung shares soaring 6.8% on the Seoul exchange—their biggest single-day gain in months. Tesla stock rose 1.5% in premarket trading, with analysts viewing the deal as a long-term strategic win despite short-term execution risks.

Geopolitical and Industry Impact

The deal aligns with Washington’s push for onshore semiconductor production, reinforcing US–South Korea tech ties amid ongoing tariff negotiations. It also signals Tesla’s intent to become a full-stack AI company, integrating hardware, software, and manufacturing under one roof.

As the race for AI supremacy accelerates, the Tesla–Samsung partnership could become a blueprint for future cross-border tech alliances.