Samsung Secures a $16.5 Billion Agreement for Tesla AI Chip Production, as Per Elon Musk: The significance of this deal is difficult to understate
Tesla has announced a significant $16.5 billion deal with Samsung to manufacture its next-generation AI6 chips exclusively at Samsung's new 2nm fabrication plant in Taylor, Texas, beginning in late 2025 and continuing through 2033. This deal marks Samsung's largest foundry contract ever and is a major strategic win for the company, which has struggled to attract large clients and compete with industry leader TSMC.
The deal will see Samsung's Taylor, Texas fab fully dedicated to producing Tesla's AI6 chips, an all-in-one design meant to scale from automotive driver assistance to high-performance AI training. The chips will be fabricated using Samsung's cutting-edge 2nm process technology, a leap in semiconductor innovation and a direct challenge to TSMC's dominance in advanced chip manufacturing.
Tesla is diversifying its chip production supply beyond TSMC, which will manufacture its AI5 chips, by locking in capacity and collaboration with Samsung for the next generation of AI chips. Tesla retains full chip design control and will collaborate closely with Samsung to maximize production efficiency, with Elon Musk personally overseeing this effort.
For Samsung, this deal provides a steady, high-value client and a showcase for its 2nm technology. The Taylor fab's dedication to Tesla chips gives Samsung an opportunity to improve yield rates and manufacturing consistency, longstanding challenges for the company. The contract with Tesla is crucial for Samsung's fab in Taylor, Texas, as it secures a major customer.
The deal may shift the dynamics of the semiconductor foundry market by strengthening Samsung’s position against TSMC, which currently leads in 2nm chip production. However, Samsung’s success hinges on improving yields and attracting additional clients beyond Tesla.
The AI6 processor is projected to ship towards the end of the decade and replace the company's next-gen AI5 processor, which is expected to enter mass production in 2026. Test production and Tesla's evaluation of the AI6 processor are expected in the second half of 2027. It is unclear whether the automotive-grade 2 SF2A fabrication process will be used to build Tesla's AI6 SoC.
The contract with Tesla is a significant testament to Samsung Foundry's ability to produce reliable chips for major automakers. Mass production and delivery of the AI6 processor are expected to begin around 2028. Neither Tesla nor Samsung Foundry has disclosed details about the upcoming AI6 project, but it is expected to arrive in Tesla cars no earlier than 2029.
Equipment installation at the Taylor fab in Texas is projected to start in the first half of next year. Samsung has reassigned semiconductor division staff from headquarters to the Taylor site in preparation. The fab in Texas is capable of making chips on Samsung's SF4, SF3, SF2 (formerly SF3P), and potentially automotive-grade 2 SF2A fabrication processes.
In summary, the $16.5 billion agreement locks in Tesla’s chip supply with cutting-edge 2nm production at Samsung’s new Texas fab, potentially transforming Samsung’s foundry business from a challenged competitor into a strategic leader in advanced AI chip manufacturing. The deal reflects Tesla's commitment to innovation and its strategic approach to securing reliable chip supply, while providing Samsung with a significant opportunity to establish itself as a major player in the foundry market.
This significant deal between Tesla and Samsung will see Samsung's Texas fab exclusively producing Tesla's next-generation AI6 chips, a boost for Samsung's foundry business in the data-and-cloud-computing industry. Tesla's focus on investing in multiple chip manufacturers, like TSMC and Samsung, demonstrates a strategic shift in the finance sector for securing its business operations. With the AI6 chip's projected launch towards the end of the decade, technology advances in AI training and automotive driver assistance are anticipated, thanks to this strategic partnership.
