Key points
- Under the deal, the partnership will run through the end of 2033
- Deal represents about 7.6pc of Samsung’s projected annual sales for 2024
- Samsung declines to confirm the client was Tesla, citing confidentiality
ISLAMABAD: Tesla CEO Elon Musk said Monday that tech giant Samsung Electronics will provide his company with its next-generation AI6 chips, following the South Korean firm’s announcement of a US$16.5 billion deal.
Samsung said Monday it had secured an eight-year agreement, without naming the client, describing it only as a “major global company” in a regulatory filing.
Under the deal, the partnership – effective from last Thursday – runs through the end of 2033, AFP reported.
“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 said on X.
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.
— Elon Musk (@elonmusk) July 28, 2025
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” he added, calling it a “critical point” in striking the deal.
“I will walk the line personally to accelerate the pace of progress,” he said, noting Samsung’s Texas plant was “conveniently located not far from my house”.
According to AFP, the deal represents about 7.6 per cent of Samsung’s projected annual sales for 2024, the company said.
It declined to confirm the client was Tesla, even after Musk’s message, citing confidentiality.
Cutting-edge AI chips
The agreement is expected to provide a major boost to Samsung, which has faced headwinds in its foundry business, lagging rivals SK hynix and Taiwan’s TSMC in the race for cutting-edge artificial intelligence chips.
Samsung Electronics is the flagship unit of South Korea’s Samsung Group, by far the largest of the family-run conglomerates that dominate Asia’s fourth-largest economy.
The company said this month that it expected operating profit to fall 56 per cent on-year and 31 per cent from the previous quarter, citing a slump in its core semiconductor division.
Experts have attributed the decline to weaknesses in its foundry operations, which involve contract-based manufacturing of chips designed by other companies.
Investment
Elon Musk’s artificial intelligence startup xAI is working with a financier to secure up to $12 billion more for its expansion plans, the Wall Street Journal (WSJ) reported last week, citing people familiar with the situation.
Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report.
The money would be used to buy a massive supply of advanced Nvidia chips that would be leased to xAI for a new huge data centre meant to help train and power its AI chatbot Grok, the WSJ reported.
