Musk confirms Tesla, Samsung’s $16.5B chip supply deal

Tesla (NASDAQ:TSLA) CEO Elon Musk on Sunday confirmed that the EV maker has signed a $16.5 billion semiconductor supply deal with Samsung Electronics (OTCPK:SSNLF), identifying Tesla as the unnamed party in a regulatory filing posted by the South Korean tech giant earlier.

“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,” Musk posted on X, adding: “Samsung currently makes AI4. TSMC (TSM) will make AI5, which just finished design, initially in Taiwan and then Arizona.”

He also emphasized Tesla’s active involvement in the manufacturing process: “Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress.” Musk noted that the new Texas facility is “conveniently located not far from my house.”

Samsung’s filing stated the contract begins July 26, 2024, and runs through December 31, 2033. While the company did not originally name the counterparty, Musk’s public confirmation clarified the agreement’s scope.

The announcement comes as Samsung, despite being the world’s second-largest foundry service provider behind TSMC, continues to lag in the high-bandwidth memory (HBM) chip market — a key segment for AI — where rivals like SK Hynix and Micron are leading.

Samsung’s attempts to certify its HBM chips with Nvidia have reportedly been pushed back to at least September, further delaying its competitive momentum. The company is scheduled to report second-quarter earnings on Thursday, with analysts expecting a sharp drop in profit.