Tesla and Samsung strike $16.5B on AI chip deal that could reshape both companies’ stocks

In a move that could reshape the future of autonomous driving and chip manufacturing, Tesla and Samsung Electronics have entered a massive $16.5 billion partnership to produce the next generation of Tesla’s AI chips.

The deal, confirmed by both companies this week, will see Samsung manufacture Tesla’s new AI6 chip at its state-of-the-art Taylor, Texas facility. The agreement runs from 2025 through 2033, with production set to ramp up in the coming years.

A New Brain for Tesla’s Self-Driving Ambitions

The AI6 chip is designed to power Tesla’s Full Self‑Driving (FSD) v13 platform, Optimus humanoid robots, and the company’s expanding AI infrastructure, including Dojo supercomputers.

This chip will replace Tesla’s earlier AI processors AI4 chips built by Samsung and the AI5 generation manufactured by TSMC. By bringing AI6 production back to Samsung, Tesla is consolidating its next phase of hardware development with a single strategic partner.

Why Samsung?

While TSMC remains the global leader in advanced semiconductors, Tesla’s decision reflects a strategic shift:

• Proximity matters – Samsung’s Texas fab is located within the U.S., reducing geopolitical risk and supply chain complexity.
• 2nm technology – The facility will produce AI6 chips on Samsung’s 2‑nanometer process, giving Tesla access to cutting-edge efficiency and performance.
• Close collaboration – Elon Musk has said he will personally oversee optimization at the fab to improve yields and efficiency.

The $16.5 Billion Baseline (and Why It May Be More)

The figure of $16.5 billion is a baseline commitment. Musk has hinted that actual production volumes and therefore the total contract value could be “several times higher” over the lifespan of the agreement.

Analysts estimate Tesla will need millions of AI6 chips to support global deployment of its FSD systems, robotics, and AI data centers.

Impact on the Market

The announcement shook financial markets:

• Samsung stock surged 6–7% on the day of the news, adding nearly $20 billion in market value.
• Tesla shares rose modestly (~1.4–3.5%), though still remain below earlier highs.
• TSMC’s stock dipped ~1.8% amid concerns about losing Tesla’s next-generation chip orders.

For Samsung, the deal represents roughly 7–8% of its 2024 revenue, a major boost for its foundry division, which has lagged behind TSMC in profitability and prestige.

A Boost for U.S. Manufacturing

The Taylor, Texas fab is one of the largest foreign investments in U.S. semiconductor production and benefits from government incentives under the CHIPS and Science Act.

Tesla’s commitment provides Samsung with a marquee customer that could help accelerate production readiness. Large-volume contracts like this are critical for bringing advanced 2nm production online.

Strategic Takeaways

• Tesla: Gains tighter control over its AI hardware, reduces reliance on overseas chipmakers, and ensures a steady supply of advanced processors for its vehicles, robots, and AI systems.
• Samsung: Secures a flagship customer, strengthens its position in the high-end foundry market, and leverages U.S. government support to expand operations.
• Industry: The deal highlights shifting supply chain priorities, with big tech companies increasingly diversifying chip suppliers to hedge against risk.

Why This Partnership Matters

This is more than just a chip order it’s a strategic alliance that strengthens both companies at a critical time:

• Tesla is moving closer to robotaxi deployment, scaling Optimus robots, and expanding its AI computing footprint.
• Samsung is looking to challenge TSMC’s dominance and prove it can deliver the world’s most advanced chips at scale.

If all goes according to plan, by 2030 this collaboration could be one of the defining factors in both Tesla’s autonomous ambitions and Samsung’s rise as a semiconductor powerhouse.