Elon Musk’s Tesla has signed a major chip supply deal with Samsung Electronics, worth around $16.5 billion, which will continue until the end of 2033. This new agreement means that Samsung will manufacture Tesla’s custom-designed chips, with full freedom given to Tesla for customisation.
What Elon Musk Said
Elon Musk, CEO of Tesla, confirmed this deal through a post on X (formerly Twitter). He shared that Samsung has agreed to let Tesla help improve the manufacturing process. Musk also said he plans to visit the chip factory himself to speed up the work. The new Samsung fabrication plant in Texas will be fully dedicated to producing Tesla’s next-generation A16 AI chip.
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Current and Future Chip Production
Right now:
- Samsung makes the A14 chip for Tesla.
- TSMC is handling the upcoming A15 chip, which will be made in Taiwan and later in Arizona.
Moving forward:
- Samsung’s new Texas facility will focus entirely on building Tesla’s powerful A16 chip.
For Samsung:
- This is a major win, as Samsung has been facing big financial losses and strong competition in the chip-making business.
- Experts believe this deal will help reduce Samsung’s losses, especially in its chip-making division, which lost more than $3.6 billion in the first half of 2025.
For Tesla:
- This ensures a reliable supply of advanced AI chips, which are crucial for Tesla’s self-driving technology and AI systems.
Global Impact:
- The deal also strengthens technology ties between South Korea (Samsung’s home) and the United States.
- It comes at a time when trade discussions and possible U.S. tariffs are a big concern, so this partnership sends a strong message about cooperation.
Tesla and Samsung’s $16.5 billion deal marks a big step forward in AI chip production, helping both companies grow while also boosting U.S.-Korea tech relations.
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