Tesla, Samsung Seal $16.5B AI Chip Deal for Future AI and Robotics

Tesla has finalized a significant $16.5 billion agreement with Samsung Electronics to procure next-generation artificial intelligence (AI) chips, a move poised to invigorate the South Korean tech giant's burgeoning yet currently unprofitable contract chip manufacturing business. While a substantial win for Samsung, analysts suggest the deal is unlikely to immediately boost Tesla's electric vehicle (EV) sales or accelerate the rollout of its robotaxi service.

According to Tesla CEO Elon Musk, Samsung's new chip factory in Taylor, Texas, will be the production hub for Tesla's upcoming AI6 chip. This commitment is expected to provide a much-needed boost to Samsung's Texas project, which has faced considerable delays due to challenges in securing and retaining major clients.

Following the announcement, Samsung shares closed up 6.8% on Monday, reflecting investor optimism that the deal will strengthen the company's position in the competitive AI chip market, where it currently trails rivals like TSMC. Tesla's shares also saw a rise of 4.2% on Monday, despite the long-term nature of the chip production, which offers no immediate solutions to the company's current challenges, including declining EV sales and the slow scaling of its nascent robotaxi service.

Musk has indicated that future AI inference chips, including the AI6, are intended for deployment in Tesla's self-driving vehicles and its Optimus humanoid robots. He also noted that their substantial computing power could enable broader AI applications. Inference chips are crucial for running AI models and facilitating real-time decision-making.

In a post on X, Musk emphasized his personal commitment to the project: "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house." He further clarified the financial scope, stating, "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher."

The deal's potential connection to ongoing trade discussions between South Korea and the United States, where Seoul is seeking U.S. partnerships in chips and shipbuilding to mitigate potential 25% U.S. tariffs, remains unclear. A South Korean trade ministry official told Reuters that they had no information linking this specific deal to the trade negotiations.

Ryu Young-ho, a senior analyst at NH Investment & Securities, highlighted the significance of the order for Samsung's Taylor facility, which "so far had virtually no customers, so this order is quite meaningful." He noted, however, that the deal might represent only a small fraction of Samsung's annual logic chip revenue. Reuters previously reported in October that Samsung had postponed deliveries of ASML chipmaking equipment for its Texas factory due to a lack of major customers, delaying the plant's operational start to 2026.

While no specific timeline for AI6 chip production was provided, Musk has previously stated that the preceding AI5 chips would enter "buying production" by the end of 2026. Analysts like Lee Dong-ju of SK Securities anticipate AI6 production in 2027 or 2028, acknowledging Tesla's history of missing production targets.

Currently, Samsung produces Tesla's AI4 chips, which power its Full Self-Driving (FSD) driver-assistance system. TSMC is slated to manufacture the AI5 chips, initially in Taiwan and later in Arizona, according to Musk.

Samsung, a global leader in memory chips, is actively expanding its foundry business, which manufactures logic chips designed by other companies. The Texas project is central to Chairman Jay Y. Lee's strategy to diversify beyond memory chips into contract chip manufacturing. Despite these ambitions, Samsung holds only an 8% share of the global foundry market, significantly trailing TSMC's 67%, as per market researcher Trendforce. Pak Yuak, an analyst at Kiwoom Securities, estimates that the deal will help reduce losses at Samsung's foundry business, which he estimates exceeded 5 trillion won ($3.6 billion) in the first half of the year.