Tesla signs $16.5B AI chip deal with Samsung for Texas facility

Austin-based electric automaker Tesla Inc. has signed a $16.5 billion deal with Samsung to manufacture its next-generation AI chips at the company’s semiconductor plant in Taylor, a major win for one of the region’s largest tech investments.

The multi-year contract runs through the end of 2033 and will involve Samsung’s new fabrication facility northeast of Austin, which is scheduled to begin operations in 2026.

Tesla CEO Elon Musk announced the agreement Sunday on X, writing: "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 disclosed the deal in a regulatory filing in South Korea shortly before Musk’s post, describing it as a contract with a "large global company," though it did not name Tesla.

Musk said Samsung has agreed to let Tesla "assist in maximizing manufacturing efficiency" and called the $16.5 billion valuation of the contract "just the bare minimum," saying the "actual output is likely to be several times higher."

Samsung now makes Tesla’s AI4 chip, Musk said, and chipmaking giant Taiwan Semiconductor Manufacturing Co. will make the AI5 chip, the design of which was recently finalized, in Taiwan and Arizona.

The new AI6 chip will be used across Tesla’s product line to run the self-driving software in its vehicles, in its Optimus robots and in data centers to power both of those products.

The Taylor plant, originally expected to be operational by 2024, has faced delays and reports have suggested construction slowed as contracted demand for microchips has lagged. The plant spans 6 million square feet on more than 1,000 acres near U.S. 79 and County Road 401, and is expected to employ about 2,000 people. The project has received up to $4.7 billion in federal support under the CHIPS and Science Act and is part of Samsung’s larger $37 billion investment in Central Texas.

The company has had operations in Austin since 1997. The Taylor expansion includes plans for two logic fabs and a research and development facility. In filings, the company has outlined the potential for up to 11 additional chip production facilities in the region over the coming decades.

Tesla, headquartered in Austin since 2021, currently uses the earlier generation Samsung-made chips to power its Autopilot system. The new AI6 chips are part of the company’s ongoing development of self-driving technology, which Musk has positioned as key to Tesla’s long-term strategy.

Tesla reported last week its second-quarter profit was down 16% as revenue fell 12%. It has not reported a profit increase since the July-September quarter of 2024. Its shares were up more than 4% Monday morning.

Samsung Electronics Co. Ltd. is to report earnings this week. Its shares ended the Monday trading session up nearly 7% on the company's home Korean Stock Exchange.