Samsung Electronics has secured a $16.5 billion chip supply contract with Tesla, according to CEO Elon Musk, marking a key win for the South Korean firm’s contract chipmaking business amid ongoing efforts to compete with top rivals such as TSMC and SK Hynix.
Samsung had announced the agreement on Saturday, without naming the customer, citing a confidentiality request. The deal, set to run through 2033, represents one of Samsung’s largest chip contracts to date and comes as its foundry unit faces mounting losses and competition in advanced semiconductor manufacturing.
Tesla’s Musk confirmed the partnership on social media platform X, stating that Samsung’s Texas fabrication plant will be dedicated to producing Tesla’s next-generation AI6 chips. “The strategic importance of this is hard to overstate,” Musk said, adding that Samsung currently makes the AI4 chips, while TSMC will manufacture the upcoming AI5 chips initially in Taiwan and later in Arizona.
Musk also said Tesla will work closely with Samsung to help improve production efficiency. “I will walk the line personally to accelerate the pace of progress,” he said, noting the factory’s proximity to his residence in Texas.
Analysts say the deal could help reduce losses in Samsung’s foundry unit, which Kiwoom Securities estimates surpassed 5 trillion won ($3.63 billion) in the first half of 2025. Samsung has struggled to retain key clients in recent years, as companies including Apple, Nvidia, and Qualcomm have shifted orders to TSMC.
While Samsung is developing 2-nanometer technology, analysts believe the Tesla order is unlikely to use the most advanced node. “It’s more likely to involve mature processes,” said Lee Min-hee of BNK Investment & Securities.
The deal is also seen as a strategic move for South Korea, which is seeking to strengthen industrial partnerships with the United States amid efforts to avert new U.S. tariffs of up to 25%.