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Published on
July 28, 2025
5 min read
Elon Musk Confirms $16.5 Billion Chip Deal With Samsung to Power AI Ambitions
Samsung Electronics has secured a $16.5 billion semiconductor contract with Tesla, according to Samsung’s regulatory filing and confirmation from Elon Musk via his X social media account, as reported by CNBC. The memory chipmaker didn’t initially reveal who the deal was with but stated in the filing that the contract would begin on July 26, 2025, and end on December 31, 2033.
Later, Elon Musk confirmed on X that Tesla was the counterparty in the deal. He posted, “Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip. The strategic importance of this is hard to overstate. Samsung currently makes AI4.TSMC will make AI5, which just finished design, initially in Taiwan and then in Arizona.”
Samsung to Make Tesla AI Chips
In the $16.5 billion deal with Samsung, the Korean tech giant will supply semiconductors to Tesla over several years. These chips will be manufactured using Samsung’s cutting-edge 4nm process technology, which is one of the most advanced in the industry today.
Tesla shares jumped more than 6% on Monday, hitting their highest level since September 2020.
Tesla’s Strategic Shift Toward Vertical Integration
Musk said that the contract would allow Tesla to scale its autonomous driving software and AI capabilities faster. Furthermore, he also added that working with Samsung gives the EV manufacturer greater control over supply chain timelines and hardware quality.
Previously, Tesla relied heavily on third-party chip suppliers like Nvidia for its computing needs. But now, Tesla has signed a chip contract to further its goal of vertical integration. The custom chips being manufactured will be used in Tesla’s self-driving vehicles as well as its Dojo supercomputers.
A Big Win for Samsung Foundry
This is a huge win for Samsung, as the $16.5 billion Tesla contract ranks among the foundry division’s largest agreements ever. Samsung Foundry is the world’s second-largest foundry service provider, trailing only Taiwan Semiconductor Manufacturing Company (TSMC).
Samsung said on the deal, “Since the main contents of the contract have not been disclosed due to the need to maintain business confidentiality, investors are advised to invest carefully considering the possibility of changes or termination of the contract.”
Analysts believe that this contract could strengthen Samsung’s presence in the AI chip market, especially in automotive and machine learning hardware. With Tesla growing its AI team and expanding its Dojo platform, Samsung’s ability to produce large volumes of AI chips at advanced nodes will be key.
Tesla’s AI-Driven Vision and Strategic Chip Partnership
Musk has consistently emphasized the importance of AI in Tesla’s future. At recent investor meetings, he noted that Tesla is not just a car company, but also an AI and robotics company at its core. This is evident in its continued investment in self-designed chips and high-performance computing.
The chip contract Tesla signed with Samsung highlights its ambition to lead in the AI-powered mobility space. It also reflects the growing demand for custom chip designs and specialized manufacturing in the electric and autonomous vehicle market.
