Samsung has agreed a $16.5bn (£12.3bn) deal to manufacture artificial intelligence chips for Tesla, in a move hailed by Elon Musk on Monday.
The South Korean tech company announced the contract with an unnamed client in a regulatory filing, with Tesla’s chief executive giving further details on his social media platform, X.
Musk wrote that Samsung would produce Tesla’s next-generation A16 chips at a new plant in Texas.
“The strategic importance of this is hard to overstate,” he wrote.
In December, the Biden administration announced $4.75bn in funding for Samsung’s semiconductor manufacturing facilities in Texas under the Chips Act, legislation aimed at making the US more self-sufficient in chip manufacturing. At the time, the then US commerce secretary, Gina Raimondo, said the funding would ensure the country had a “steady stream” of chips essential to AI and national security.
In a post on X on Monday, Musk said Samsung had agree to allow Tesla to “assist in maximising manufacturing efficiency” and he would “walk the [manufacturing] line personally to accelerate the pace of progress”.
He added that the Samsung plant in Taylor, outside Austin, Texas, was “conveniently located not far from my house”.
The deal will help re-energise a project faced long delays amid Samsung’s difficulties in retaining and attracting big clients. Ryu Young-ho, a senior analyst at Seoul-based NH Investment & Securities, said the Taylor plant “so far had virtually no customers”, making the deal “quite meaningful”.
In October, Reuters reported that Samsung had postponed taking deliveries of chip-making equipment from ASML, a Dutch manufacturer, for the Texas site as it had not yet won any significant customers for the project. It has already delayed the plant’s operational start to 2026.
Samsung makes Tesla’s AI4 chips, which power the carmaker’s full self-driving driver assistant system. Taiwan’s TSMC is slated to make the AI5 chips for Tesla, initially in Taiwan and then Arizona, Musk has said.
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The regulatory filing by Samsung announcing the chip supply agreement did not name the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033.
Samsung has been approached for comment.
Reuters contributed to this article