Samsung secures $16.5 billion deal with Tesla for AI chip manufacturing

In a significant development for the technology and automotive industries, Samsung Electronics has secured a multiyear agreement with Tesla that is valued at 22.8 trillion won ($16.5 billion). Announced in July 2025, this deal marks a pivotal moment, as it will see Samsung produce the next-generation AI6 inference chip for Tesla, which is expected to power advancements in humanoid robotics, self-driving vehicles, and AI data centers. The AI6 chip is specifically designed to meet the growing demands of the electric vehicle sector and the evolving landscape of artificial intelligence technology. This arrangement between Samsung and Tesla will see production take place at Samsung’s newly established fabrication facility in Texas, which is projected to begin operations in 2026. Before the official announcement, Elon Musk, Tesla's CEO, shared details on his social media platform, indicating the strong partnership between the two companies in this high-tech endeavor. The collaboration came to light shortly after Samsung revealed the deal's existence without initially disclosing Tesla as the client, emphasizing strict confidentiality. This deal is particularly crucial for Samsung as it seeks to rebound from recent struggles in its contract chipmaking sector. The company has been facing challenges, including a reported sharp 56% decline in operating profit and dwindling demand due to U.S. export restrictions on advanced semiconductor sales to China. Compounding these difficulties is the stiff competition from Taiwan Semiconductor Manufacturing Company (TSMC), which currently commands a substantial share of the global foundry market. This partnership with Tesla is seen as a strategic move to reinvigorate Samsung’s foundry business and secure its position in an increasingly competitive industry. The announcement did not fail to produce a positive effect on Samsung's stock, with shares rising nearly 7% on the local stock exchange following the news. Analysts interpret this deal as a potential turning point for Samsung, instilling optimism about a gradual recovery in demand for its chips. As various sectors continue to advance technologically, the implications of this collaboration between Samsung and Tesla, particularly in the realms of autonomous driving and artificial intelligence, could pave the way for significant innovations in the coming years.