Samsung and Tesla Announce $16.5 Billion AI Chip Partnership

Samsung has secured a $16.5bn agreement with Tesla to manufacture AI chips at a new fabrication plant in Texas. The deal marks one of the largest semiconductor partnerships today and aligns with recent US government initiatives to enhance domestic semiconductor manufacturing capabilities. Tesla's CEO Elon Musk highlighted the deal's value for the company's autonomous vehicle technology ambitions. The partnership also validates Samsung's strategy to establish a significant manufacturing footprint in the US.

Title: Samsung Secures $16.5 Billion Contract with Tesla to Manufacture AI Chips

Samsung Electronics Co. has signed a $16.5 billion agreement with Tesla Inc. to manufacture AI chips at a new fabrication plant in Texas. This partnership marks one of the largest semiconductor deals in recent history and aligns with recent U.S. government initiatives to bolster domestic semiconductor manufacturing capabilities [1].

The agreement, announced by Tesla CEO Elon Musk on X, involves the production of an advanced AI chip, the AI6, which will power Tesla's next-gen autonomous systems, including its upcoming robotaxi fleet and Optimus humanoid bot [1]. Samsung is currently constructing a $17 billion fab in Taylor, Texas, which is expected to start producing chips in small volumes by the second half of 2027 [2].

The AI6 chip will be preceded by the AI5, which is set to enter mass production next year. The AI5 will be manufactured by Taiwan Semiconductor Manufacturing Co. using an unspecified manufacturing node. The AI6, however, is expected to leverage Samsung's 2-nanometer node, significantly more advanced than the 7-nanometer node currently used for the AI4 chips [2].

Elon Musk emphasized the importance of this deal for Tesla's autonomous vehicle technology ambitions. He noted that the partnership will provide valuable foundry experience and potentially accelerate the pace of progress in manufacturing efficiency [1]. The deal also validates Samsung's strategy to establish a significant manufacturing footprint in the United States, which is critical given the ongoing efforts to reduce reliance on foreign semiconductor production [2].

This partnership underscores the growing importance of AI and autonomous vehicle technology in the global economy. Cathie Wood, CEO of ARK Invest, has described Tesla as "the largest AI project on earth," predicting that its autonomous vehicle efforts could generate trillions in revenue within the next 5-10 years [1]. While Tesla's second-quarter revenue dropped 12% year-over-year, analysts remain optimistic about the company's long-term AI bets [1].

References:
[1] https://www.benzinga.com/markets/tech/25/08/46819258/elon-musk-agrees-with-cathie-wood-tesla-is-largest-ai-project-on-earth-amid-robotaxi-vision-samsung-chip-deal-buzz
[2] https://siliconangle.com/2025/07/28/tesla-signs-16-5b-chip-manufacturing-contract-samsung/