Samsung teams up with Tesla for a $16.5 billion project to manufacture advanced AI6 semiconductors in Texas
Tesla and Samsung Announce Multi-Billion Dollar Deal for Next-Generation AI Chip Production
Tesla and Samsung Electronics have signed a $16.5 billion multiyear agreement through 2033, with Samsung set to produce Tesla's next-generation AI6/HW6 chips at its large fabrication plant in Taylor, Texas, located near Tesla's headquarters and Gigafactory.
Elon Musk, Tesla's CEO, confirmed the deal on his social media platform and expressed the strategic importance of the partnership, stating that it is "hard to overstate." Production is set to begin in 2026, with Tesla working closely with Samsung to optimize manufacturing efficiency.
The AI6/HW6 chip will power Tesla's Full Self-Driving (FSD) system, Optimus humanoid robots, and future AI infrastructures, marking a key step in Tesla’s autonomy technology roadmap. This deal represents a major shift in Tesla's chip strategy, as Samsung will handle the production, while TSMC is currently producing the AI5/HW5 chips.
For Samsung, this partnership is a significant boost to its chip foundry business, which has faced tough competition from TSMC. The collaboration is expected to help Samsung’s Texas fab ramp up advanced system-on-chip (SoC) production capabilities, aimed at meeting Tesla’s demanding production yield targets of 60–70%, with full mass production likely around 2028.
The proximity of Samsung's new facility to Tesla's headquarters and Gigafactory was a critical factor in the deal. The AI6 chip is expected to deliver significant performance improvements over previous hardware generations, playing a critical role in Tesla's pursuit of full autonomy and advanced AI applications.
The timeline for the AI6 chip's production or implementation in Tesla vehicles was not provided in the announcement. However, the AI5 chips are not expected to appear in Tesla vehicles until later into 2026.
The new Samsung fabrication facility is located just north of Austin, Texas, where Tesla's headquarters and Gigafactory are based. The multiyear deal, running through to 2033, will see Samsung manufacture the AI6 chips at its new fabrication facility in Taylor, Texas.
The significance of the Tesla-Samsung deal includes securing a nearby, strategically critical semiconductor supply chain for Tesla, boosting Samsung's US-based semiconductor production and competitiveness, and advancing Tesla’s future autonomous driving and robotics ambitions. The collaboration may also accelerate innovation and manufacturing efficiency in next-gen AI chips, potentially lowering costs and improving Tesla vehicle capabilities.
In summary, the Tesla-Samsung $16.5 billion deal is a cornerstone investment in Tesla’s future AI hardware and autonomy stack, leveraging Samsung’s Texas fab to produce cutting-edge chips critical to Tesla's Full Self-Driving and AI-powered product ecosystem through 2033.
References: [1] Bloomberg [2] Elon Musk’s social media platform X [3] Tesla’s official statement [4] Samsung Electronics’ official statement
- This multi-billion dollar deal between Tesla and Samsung falls within the realms of both technology and finance, as it involves a significant investment in advanced AI chip production, a key component in Tesla's business strategy.
- The partnership between Tesla and Samsung, encompassing the production of next-generation AI chips, underscores the intersection of the technology, finance, and business industries, as Samsung aims to enhance its chip foundry business with this collaborative venture.
