Tesla and Samsung Team Up to Power the Future of Self-Driving Cars

Elon Musk has announced that Tesla has entered a $16.5 billion chip deal with Samsung Electronics, making it one of the largest long-term chip supply agreements in the auto-tech space.

The chips will be produced at Samsung’s new factory in Taylor, Texas, and are intended for Tesla’s future AI6 chips, which will power the company’s next-generation self-driving technology.

The deal runs through 2033 and marks a critical turning point for Samsung’s chip foundry business, which has struggled to compete with industry leader TSMC. Until now, Samsung’s Texas plant had few major clients. Following the news, Samsung shares surged nearly 7%, while Tesla saw a smaller pre-market boost.

Musk noted that Tesla will work closely with Samsung to improve production efficiency at the Texas fab, saying he personally plans to oversee progress on-site. Samsung already supplies Tesla with its AI4 chips, while TSMC is expected to handle the upcoming AI5 chips.

This deal not only boosts Samsung’s presence in the U.S. but also deepens ties between the two companies as the global chip competition heats up, especially in the race for AI and electric vehicle dominance.