Samsung Wins $16.5 Billion Tesla Chip Contract

South Korean Giant to Manufacture Next-Gen AI6 Chips for Tesla Through 2033
In a massive boost for its semiconductor division, Samsung Electronics has secured a $16.5 billion contract to produce advanced AI6 chips for Tesla, cementing a long-term partnership that could reshape the competitive landscape of the global chip industry.
The deal, confirmed by both companies, will run until 2033 and positions Samsung as a key supplier for Tesla’s rapidly evolving AI and autonomous driving technology platforms. The contract accounts for 7.6% of Samsung’s projected 2024 revenue, signaling a significant turnaround for its foundry division, which has faced pressure amid rising competition from TSMC and Intel.

“This agreement marks a strategic alignment between two innovation leaders,” said a senior Samsung executive. “It strengthens our position in the advanced logic chip segment, especially in high-performance automotive AI.”

Market Response and Strategic Impact
Shares of Samsung surged 6.3% in Seoul trading following the announcement its largest daily gain since September 2024. Investors cheered the news, viewing it as a sign that Samsung is regaining ground in a foundry market dominated by Taiwan Semiconductor Manufacturing Company (TSMC).
Tesla CEO Elon Musk also weighed in, noting via social media that the true value of the contract could exceed the initial estimate, depending on future chip iterations and production volumes.

“Samsung has shown impressive progress in AI chip design and scalability,” Musk wrote on X (formerly Twitter). “We’re excited about what this means for the future of self-driving and robotics.”

What Are AI6 Chips?
The AI6 chips will reportedly power Tesla’s Full Self-Driving (FSD) platform and its forthcoming robotaxi fleet. Industry insiders say the chips are built using 3-nanometer (3nm) process technology, offering significantly improved power efficiency, heat dissipation, and processing speed.
Samsung is expected to manufacture these chips at its state-of-the-art Pyeongtaek facility, which has received billions in infrastructure and R&D investments. The production will also support Tesla’s Dojo supercomputer, which the automaker claims will become a key pillar of its AI development strategy.
Global Semiconductor Competition Heats Up
This deal is viewed as a major victory in Samsung’s battle against TSMC, which supplies chips to Apple, NVIDIA, AMD, and Qualcomm. It follows a string of setbacks for Samsung’s foundry business, which struggled to keep pace with TSMC’s rapid technology node transitions.
Samsung has invested heavily to catch up, launching the SF3 (3nm GAA) process node and targeting $100 billion in semiconductor-related capital expenditure through 2030. With Tesla now on board, analysts say Samsung is back in contention.
Geopolitical and Supply Chain Implications
The agreement may also help diversify Tesla’s semiconductor supply chain, which has been under scrutiny amid U.S.–China tensions and geopolitical risks in Taiwan. By partnering with Samsung, a South Korean firm, Tesla is spreading its chip production across multiple regions reducing dependency on any single provider.
Industry analysts say this trend reflects a broader shift in global tech sourcing strategies. Automakers, in particular, are seeking more reliable, diversified, and scalable chip supply partners.