Samsung just secured a major multi-billion dollar deal with Elon Musk’s Tesla. Samsung Electronics Co. will produce AI semiconductors for Tesla Inc. in a new $16.5 billion pact that marks a win for its underperforming foundry division.
Samsung Electronics, a South Korean multinational conglomerate founded in 1938, is a global leader in technology and innovation. Headquartered in Suwon, South Korea, Samsung is known for its wide range of products, including smartphones, televisions, semiconductors, and consumer appliances.
As of 2024, Samsung briefly surpassed Intel to become the world’s largest semiconductor company by revenue. The company operates in over 70 countries and employs more than 260,000 people worldwide, maintaining a strong global presence.
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In 2025, Samsung is focusing on advancing artificial intelligence and next-generation semiconductor manufacturing. Committed to sustainability, the company aims to achieve net-zero Scope 1 and 2 emissions by 2030 and is increasing its use of renewable energy. Samsung also emphasizes circular economy practices by incorporating recycled materials into products and running e-waste collection programs in approximately 80 countries. Despite challenges like fluctuating global semiconductor demand, Samsung continues to invest strategically in innovation and growth to maintain its leadership in the tech industry.
Bloomberg reports that the plan is for an upcoming plant in Taylor, Texas, to produce Tesla’s next-generation AI6 chip, Tesla chief Elon Musk said on X, confirming a Bloomberg News report.
“The strategic importance of this is hard to overstate,” Musk, 54, wrote on X. He described the value of the deal announced by Samsung as “just the bare minimum. Actual output is likely to be several times higher.”
Samsung is expanding production in Texas with support from the 2022 Chips Act and Science Act, Washington’s effort to rebuild the American semiconductor industry with $39 billion in grant funding and billions more in tax breaks and other incentives.
Before the landmark $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. In 2016, Tesla began receiving shipments of Samsung SDI’s 18650 lithium-ion battery cells. These cells were primarily used in Tesla’s energy storage products, such as the Powerwall and Powerpack, rather than in Tesla electric vehicles.
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Elon Musk confirmed that Samsung’s batteries powered Tesla’s energy division but were not incorporated into vehicle battery packs. Samsung SDI’s involvement was crucial in large-scale energy storage projects, notably the 2017 deployment of a 100 MW/129 MWh energy storage system in South Australia, which was one of the world’s largest at the time. This collaboration allowed Tesla to diversify its supply chain and enhance its energy storage capabilities.
These early partnerships laid the groundwork for a deeper and more strategic alliance between the two companies. This latest collaboration highlights Samsung’s strategic push into AI chip production and Tesla’s commitment to leading-edge technology for autonomous driving and AI applications.
Supported by U.S. government incentives, Samsung’s new Texas plant will play a crucial role in meeting Tesla’s growing demand for AI chips.