Samsung secures substantial funding of $16.5 billion, in collaboration with Elon Musk's Tesla company.
Samsung Electronics Co., a South Korean multinational conglomerate, has secured a significant deal with Tesla Inc., worth $16.5 billion over an eight-year period from 2025 to 2033. This partnership will see Samsung manufacturing Tesla's next-generation AI semiconductors at its new plant in Taylor, Texas 13.
Under the terms of the agreement, Samsung will produce Tesla-designed AI chips, known as AI6 hardware. These chips are crucial for Tesla’s autonomous driving software, neural network training, and other AI-driven vehicle functions 13. Tesla will retain full design control but will collaborate closely with Samsung to optimize manufacturing efficiency. Elon Musk, Tesla's CEO, has personally taken an active role in overseeing and accelerating production improvements at the Texas plant 13.
This deal represents a significant win for Samsung's underperforming foundry division, positioning it as a major competitor to TSMC in advanced chip manufacturing 1. Tesla’s AI6 chips will benefit from Samsung's cutting-edge 2nm chip technology, expected to yield substantial improvements in power and efficiency 2.
Tesla's previous chip generations involved multiple foundries, including Samsung and TSMC. However, this agreement secures Samsung as a primary partner for future AI hardware supply 1. The partnership is part of Tesla’s broader AI hardware strategy shift, where it is increasingly relying on external specialized manufacturers like Samsung, Nvidia, and AMD rather than fully in-house development 4.
The deal supports both companies strategically. Tesla ensures a stable supply of tailored AI semiconductors critical for its vehicle autonomy plans and robotics projects like the Optimus humanoid robot. Meanwhile, Samsung boosts its foundry business and expands its footprint in the automotive semiconductor sector 13.
Samsung operates in over 70 countries and employs more than 260,000 people worldwide. The company is headquartered in Suwon, South Korea. Before the $16.5 billion AI chip manufacturing deal in 2025, Tesla and Samsung had a history of collaboration primarily centered around battery technology and energy storage. Samsung SDI's involvement was crucial in large-scale energy storage projects, including a 100 MW/129 MWh energy storage system in South Australia in 2017 6.
Samsung aims to achieve net-zero Scope 1 and 2 emissions by 2030 and is increasing its use of renewable energy. The company also emphasizes circular economy practices by incorporating recycled materials into products and running e-waste collection programs in approximately 80 countries [7].
The new Texas plant will play a crucial role in meeting Tesla's growing demand for AI chips. The partnership is further bolstered by support from the 2022 Chips Act and Science Act, aimed at rebuilding the American semiconductor industry 8. As of 2024, Samsung briefly surpassed Intel to become the world's largest semiconductor company by revenue 9.
Elon Musk confirmed that Samsung's batteries powered Tesla's energy division but were not incorporated into vehicle battery packs. It is worth noting that before the $16.5 billion deal, Tesla received shipments of Samsung SDI's 18650 lithium-ion battery cells in 2016, primarily for energy storage products like the Powerwall and Powerpack 10.
In summary, the Samsung-Tesla partnership is a strategic, long-term manufacturing collaboration focused on producing Tesla’s custom AI chips with cutting-edge 2nm technology in Texas, integrating Samsung’s semiconductor manufacturing strength with Tesla’s AI hardware design. This partnership is expected to accelerate innovations in electric and autonomous vehicles.
[7]: https://www.samsung.com/global_ RoE/sustainability/
- With Tesla's AI6 chips set to benefit from Samsung's advanced 2nm chip technology, this partnership marks a significant investment in technology and artificial-intelligence-driven business, particularly in the automotive sector.
- The Samsung-Tesla alliance could potentially lead to improvements in investing in innovative semiconductor technology, as the deal has positioned Samsung as a key partner for Tesla's future AI hardware supply in the pursuit of autonomous driving and vehicle autonomy plans.
