In a surprising announcement, Tesla CEO Elon Musk has confirmed that the electric vehicle giant has signed a monumental $16.5 billion chip manufacturing deal with South Korea’s Samsung Electronics. The deal will power the production of Tesla’s next-generation AI chips.

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Musk took to X (formerly Twitter) to validate a Bloomberg report, adding that the actual value of the agreement is likely "much more than that." He emphasised the strategic magnitude of the partnership, which places Samsung in charge of manufacturing Tesla’s forthcoming AI6 chips.

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

The Next-Gen AI6 Chips

According to Musk, Samsung’s state-of-the-art semiconductor fabrication plant in Taylor, Texas, will be dedicated to producing the AI6 chips. The CEO remarked that Samsung is currently producing Tesla’s AI4 chips, while TSMC has just completed the design for the AI5 generation, which will be initially manufactured in Taiwan and later in Arizona. Highlighting the significance of the new collaboration, Musk said, “The strategic importance of this is hard to overstate,” signalling a major leap forward in Tesla's AI chip roadmap.

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Tesla to Aid in Streamlining Production

One of the more interesting aspects of the deal is that Samsung has agreed to let Tesla actively participate in optimising the manufacturing process. Musk noted that he intends to “walk the line personally to accelerate the pace of progress.” The Taylor facility’s location, just thirty minutes from Musk’s residence in Austin, makes hands-on involvement much more feasible.