Tesla And Samsung Agree To $16.5 Billion Chip Supply Deal

Elon Musk confirmed on Monday that Tesla has reached a $16.5 billion agreement with Samsung. The South Korean company will supply semiconductors for the American firm’s electric vehicles (EVs).

Musk announced the new partnership in a post on the social media platform X, stating that Samsung will develop advanced chips for the automaker.

“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,” wrote Musk. “Samsung currently makes AI4. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.”

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 Arizona.

— Elon Musk (@elonmusk) July 28, 2025

According to CNBC, Samsung explained in a new filing—without naming the counterpart—that it signed a contract starting on July 26, set to expire on December 31, 2033. The Korean firm said it would not reveal the name of the partner until the end of the contract “to protect trade secrets.”

“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,” said the company. Its shares rose 6% this week.

Musk did not provide further details about the agreement but emphasized that the strategic partnership plays a crucial role for his company.

“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” added Musk in another post. “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.”

The new deal also strengthens Samsung’s business trajectory, as it has recently fallen behind competitors such as Micron and SK Hynix.

Tesla has been expanding its services and product offerings. It recently began rolling out its Robotaxi services in Texas.