Elon Musk’s Tesla has inked a major deal with Samsung Electronics. The Elon Musk’s company has inked a major chip supply agreement with Samsung. The deal is reportedly worth $16.5 billion and is set ti run through the end of 2033. The announcement was confirmed by Tesla CEO Elon Musk, who said Samsung had agreed to allow “full customisation of Tesla-designed chips”. Along with this, Musk also revealed that Samsung’s latest Texas fabrication plant would be dedicated to producing Tesla’s next-generation A16 chipset. This deal with Tesla marks as a crucial win for Samsung as the company was reportedly struggling with losses and stiff competition.
Elon Musk confirms Tesla’s chip deal with Samsung
Tesla CEO Elon Musk recently confirmed that the company has signed a deal with Samsung for complete customisation of Tesla-designed chips. Musk confirmed the deal with a post on social media platform X (formerly known as Twitter). “Samsung agreed to allow Tesla to assist in maximising 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,” wrote Musk.Tesla CEO also confirmed that Samsung will manufacture Tesla’a next-generation A16 chipset at news Texas fabrication. Presently Samsung makes A14 chip for Tesla, whereas TSMC will manufacture the A15 chipset in Taiwan and 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,” added Musk.
Why is the deal important for Samsung and Tesla
The deal said to be an important win for Samsung’s contract chip-making business, which has been struggling to compete with rivals like TSMC. As per the analyst, the partnership is said to help Samsung in reducing the loses in its foundry division which reportedly exceeded $3.6 million in the first half of 2025. On the other hand, for Tesla the deal means a continuous supply of custom logic chips made for its evolving AI stack.The deal also carries broader geopolitical implications, strengthening technology ties between South Korea and the United States, particularly amidst ongoing trade discussions and potential US tariffs.
