Tesla struck a massive $16.5 billion semiconductor deal with Samsung that’ll run from 2025 to 2033. The electric car maker will have Samsung produce its next-generation AI6 chips at a dedicated Texas factory, marking a major shift in Tesla‘s chip supply strategy.
The deal represents about 7.6% of Samsung’s semiconductor revenue and gives the Korean tech giant a high-profile client for its struggling foundry business. Samsung hasn’t publicly named Tesla as the customer, but industry analyses have identified the automaker as the partner behind this landmark agreement. The partnership comes as Samsung’s foundry division faces significant challenges, with TSMC projected to maintain a dominant 66% market share in 2025.
Samsung will manufacture the AI6 chips using its advanced 2-nanometer process technology at the Texas facility. The chips will be produced at a new plant in Taylor, Texas, providing strategic proximity to Tesla’s operations. These chips will power Tesla’s autonomous driving systems and artificial intelligence applications. The location matters – it’s close to Tesla’s Austin headquarters and factory, making it easier for the companies to work together.
This partnership goes beyond a typical supplier relationship. Elon Musk plans to personally inspect Samsung’s production lines, showing Tesla’s hands-on approach to chip manufacturing. The companies will collaborate on improving production efficiency and fixing yield problems that have plagued Samsung’s advanced chip production.
The deal helps Tesla reduce its dependence on Taiwan Semiconductor Manufacturing Company (TSMC), which currently makes Tesla’s AI5 chips. By working with both Samsung and TSMC, Tesla guarantees it won’t be stuck if one supplier faces problems.
Samsung’s 2-nanometer technology uses a different approach than TSMC’s version. While TSMC’s process promises 10 to 15 percent better performance, Samsung’s MBCFET technology offers its own advantages for power efficiency – vital for Tesla’s energy-hungry AI systems.
The Texas factory gives Samsung a chance to perfect its 2-nanometer manufacturing without splitting resources across multiple projects. It’s a strategic win for Samsung as it tries to catch up to TSMC, which dominates the advanced chip manufacturing market.
This partnership signals a broader shift in the chip industry. As demand for specialized AI chips grows beyond smartphones and computers, companies like Tesla are becoming major players in semiconductor development. The eight-year commitment shows both companies are betting big on their technological collaboration.