Elon Musk announces Tesla's $16.5 billion chip deal with Samsung

On July 28, 2025, in the United States, Elon Musk disclosed that Tesla signed a significant contract valued at $16.5 billion with Samsung to secure a supply of semiconductor chips. This announcement came shortly after Samsung had released a statement regarding a supply agreement; however, it did not initially mention the collaborating company. Musk took to social media to confirm Tesla’s role in this strategic partnership. He emphasized that Samsung's new Texas fabrication facility would be primarily dedicated to manufacturing Tesla’s next-generation AI6 chip, showcasing the importance of this pact amid increasing demands for advanced technologies. In his remarks, Musk pointed out the critical nature of this agreement for Tesla’s future. He mentioned that Samsung currently produces the AI4 chip, while the upcoming AI5 chip is being manufactured by TSMC in Taiwan and Arizona. Musk's confirmation aligns with Tesla's ongoing focus on enhancing its technological capabilities, especially concerning artificial intelligence and semiconductors, which are essential for their electric vehicles and related technologies. Moreover, he expressed that Samsung's willingness to collaborate with Tesla on optimizing manufacturing efficiency was a pivotal aspect of the deal. Musk's personal engagement in this matter underlines the urgency with which Tesla aims to accelerate progress in the chip manufacturing domain. As part of the agreement, the contract is set to commence on July 26, 2025, and continue until December 31, 2033. Notably, Samsung has indicated that the identity of its partner company would remain confidential until the contract's expiration to safeguard trade secrets. The semiconductor industry has been under significant strain in recent years, primarily due to heightened demand and supply chain disruptions that have impacted various sectors, including automotive. Tesla’s massive investment underscores the company's strategic attempts to mitigate these challenges and secure a steady supply of critical components that are integral to its production processes. This deal not only highlights the growing significance of semiconductor technology in modern vehicles but also places Tesla in a advantageous position as it continues to push the boundaries in electric vehicle innovation and smart technology integration.