Samsung secures $16.5 bn semiconductor foundry deal from Tesla

(Reuters/Yonhap)

South Korean tech giant Samsung Electronics Co. will manufacture Tesla Inc.’s next-generation autonomous driving chips at its new U.S. semiconductor plant in Taylor Texas.

Tesla Chief Executive Officer (CEO) Elon Musk announced on Monday that his company signed a $16.5 billion semiconductor foundry supply contract with Samsung Electronics.

The deal accounts for 7.6 percent of Samsung’s entire sales of 300.87 trillion won ($216.52 billion) in 2024, with the contract period spanning from July 24th, 2025 to December 31st, 2033.

“Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation A16 chip,” Musk said in a post on his social media platform X. “The strategic importance of this is hard to overstate.”

He also noted that “Samsung currently makes A14 [chips],” while nothing that “Taiwan Semiconductor Manufacturing Co. (TSMC) will make A15, which just finished design.”

The AI6 chip is Tesla’s latest AI semiconductor, designed for autonomous vehicles to be released after 2027.

Featuring a scalable architecture, it is expected to be used not only in autonomous vehicles and humanoid robots but in data centers and supercomputers as well.

According to Musk, “Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” adding, “This is a critical point, as I will walk the line personally to accelerate rhe pace of progress.”

His statement signals that Samsung is not merely producing Tesla’s AI chips, which are one generation ahead of TSMC’s offering, but has become its strategic and collaborative partner that goes beyond a simple client-supplier relationship.

An industry insider also viewed this development as “positioning Samsung at the forefront of technological trends, not just ahead of TSMC in chip generation.”

With the latest contract, Samsung’s foundry division - currently facing lackluster performance - is expected to gain a rebound opportunity by narrowing the gap with TSMC.

In its recently announced preliminary second-quarter 2025 results, Samsung Electronics posted an operating profit of 4.6 trillion won on sales of 74 trillion won.

The operating profit fell well below market expectations, mainly due to the sluggish performance of the foundry and System LSI divisions.