Samsung Electronics has secured a monumental $16.5 billion deal with Tesla to manufacture and supply advanced semiconductors through 2033, marking one of the most significant long-term collaborations in the global tech and automotive industries.
The strategic agreement underscores the critical role of cutting-edge chips in the future of electric vehicles (EVs), autonomous driving, and artificial intelligence systems.
The chips, developed by Tesla and to be produced by Samsung, will power Tesla’s next-generation technologies, including its Full Self-Driving (FSD) software, Dojo supercomputing platform, and Optimus humanoid robot.
Additionally, the firm will fabricate these semiconductors using Samsung’s state-of-the-art 2-nanometer process technology, which delivers greater efficiency, lower power consumption, and significantly higher performance crucial for the complex processing needs of AI-driven systems.
Samsung is Ramping Up Preparations at Taylor Plant.
Manufacturing will take place at Samsung’s new foundry in Taylor, Texas. This facility is part of Samsung’s broader $40 billion investment in the United States, backed by support from the U.S. CHIPS and
Science Act aimed at reshoring semiconductor production and reducing reliance on overseas supply chains. The Taylor plant will become a major hub for advanced chip production, with the Tesla contract serving as a foundational client win.
For Tesla, this deal ensures a long-term, stable supply of high-performance chips at a time when demand for custom AI hardware is skyrocketing. By partnering with Samsung, Tesla diversifies its supply chain beyond Taiwan’s TSMC, which previously handled the production of Tesla’s fifth-generation AI chips.
The move aligns with Tesla’s broader strategy of vertically integrating its hardware development to reduce dependency and gain tighter control over performance and production timelines.
Elon Musk has confirmed Tesla’s involvement in overseeing aspects of the chip production process, emphasizing quality assurance and process optimization. He highlighted that the chips Samsung will produce are mission-critical for Tesla’s ambitions in AI and robotics, calling the partnership a “cornerstone” for the company’s technological future.
For Samsung, the contract is a major victory for its foundry division, which has been working to challenge TSMC’s dominance in the global semiconductor manufacturing market. The Tesla deal not only provides a substantial financial boost but also enhances Samsung’s reputation as a reliable supplier of advanced custom chips for world-leading tech innovators.
Industry observers say this agreement could reshape the competitive landscape in both the semiconductor and EV industries.
