Musk hails $16.5bn Samsung deal to supply Tesla with AI chips
South Korean tech company will produce carmaker’s next-generation semiconductors at new plant in Texas
Samsung has agreed a $16.5 billion (£12.3 billion) deal to make artificial intelligence chips for Tesla, in a move hailed by Elon Musk. The South Korean tech company announced the contract with an unnamed customer in a regulatory filing, with the Tesla chief executive giving further details on his social media platform, X. Musk wrote that Samsung would produce Tesla’s next-generation AI6 chips at a new plant in Texas.
“The strategic importance of this is hard to overstate,” he wrote. In December, the Biden administration announced $4.75 billion in funding for Samsung’s semiconductor manufacturing facility in Texas under the Chip Act, legislation aimed at increasing US self-sufficiency in chip manufacturing. At the time, then-US Commerce Secretary Gina Raimondo said the funding would ensure the country had a steady stream of chips essential to artificial intelligence and national security. In a post on X on Monday, Musk said Samsung had agreed to allow Tesla to “help maximize manufacturing efficiency” and that he would “personally oversee the production chain to accelerate the pace of progress.”
He added that Samsung's Taylor plant, just outside Austin, Texas, was "conveniently located near my home." The deal will help revitalize a project that suffered long delays due to Samsung's difficulties in retaining and attracting large customers. Ryu Young-ho, a senior analyst at Seoul-based NH Investment & Securities, said the Taylor plant had "virtually no customers so far," making the deal "very significant." Alvin Nguyen, a senior analyst at Forrester, a global research and advisory firm, said it was a "good deal for both companies."
He added: “Samsung gains a customer for its semiconductor business in a US facility with ample capacity. Tesla gains a partner capable of producing its chips in the US, minimizing the complexity of its supply chain.” In October, Reuters reported that Samsung had postponed receiving chipmaking equipment from ASML, a Dutch manufacturer, for the Texas plant as it had yet to secure significant customers for the project. It has already delayed the plant’s start of operations until 2026. Samsung makes Tesla’s AI4 chips, which power the automaker’s fully autonomous driver assistance system. Taiwan’s TSMC is slated to make the AI5 chips for Tesla, initially in Taiwan and then in Arizona, Musk has said.
Samsung's regulatory filing announcing the chip supply deal did not name the customer, stating that the client had requested confidentiality regarding the details of the agreement, which runs until the end of 2033. Samsung was contacted for comment. Reuters contributed to this article.
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