Samsung Electronics has finalized a $16.5 billion agreement to manufacture artificial intelligence semiconductors for Tesla, a contract that significantly enhances the South Korean company’s struggling foundry division while supporting Tesla’s advancement in autonomous driving technology.
The 22.8 trillion won agreement, revealed on Monday, is set to continue until the end of 2033. Production is scheduled to take place at a facility currently under construction in Taylor, Texas, where Tesla’s forthcoming AI6 chips will be produced.
Elon Musk, the Chief Executive of Tesla, confirmed the deal in a post on X, describing it as “just the bare minimum” and implying that the actual worth of the agreement could be much greater.
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Following the announcement, Samsung’s shares surged nearly 7% in Seoul, reaching their highest point since September. Suppliers like Soulbrain Co. also experienced a rally, with their shares increasing by 16%. A spokesperson for Samsung refrained from disclosing further details, citing confidentiality agreements in the contract, as reported by Bloomberg.
Musk stated that he will personally oversee the chip fabrication process and assist in optimizing production. He emphasized that the AI6 chips will be fundamental to Tesla’s future self-driving technology. Currently, Samsung manufactures Tesla’s AI4 chips, while Taiwan Semiconductor Manufacturing Company (TSMC) has been selected for the upcoming AI5 generation.
This agreement represents Samsung’s first significant contract achievement since Executive Chairman Jay Y. Lee was acquitted of all remaining legal charges earlier this year. The company has been facing challenges with underutilization in its foundry business, which has encountered increasing losses while attempting to secure orders. The completion of the Texas facility has already been postponed to 2026 due to these difficulties.
