Samsung’s Texas Plant to Build Tesla’s Next-Gen AI6 Chips

Tesla CEO Elon Musk announced on Monday that the U.S. automaker has signed a chip supply agreement with Samsung Electronics. This deal is expected to strengthen Samsung’s struggling contract manufacturing business. On Saturday, Samsung revealed a $16.5 billion chip supply deal with a major global firm, though it did not disclose the client’s name. The company stated the client requested confidentiality, and the agreement will last until the end of 2033. Reuters sources confirmed that Tesla is the customer involved in this deal.

The deal comes at a time when Samsung faces increasing pressure to produce artificial intelligence chips, lagging behind competitors like TSMC and SK Hynix. This has negatively impacted its profits and stock performance. Samsung, the world’s leading memory chip producer, also manufactures logic chips for clients through its foundry division.

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Pak Yuak, an analyst at Kiwoom Securities, commented that this deal could help Samsung‘s foundry business reduce losses, which he estimates exceeded 5 trillion won ($3.63 billion) in the first half of the year. Analysts note that Samsung has lost key clients to TSMC for advanced chips; TSMC’s customers include Apple, Nvidia, and Qualcomm.

The Samsung-Tesla agreement is also important for South Korea, which is pursuing U.S. partnerships in chips and shipbuilding amid efforts to negotiate a trade deal that could reduce or eliminate potential 25% U.S. tariffs. It remains uncertain how this order will influence Samsung’s plans to begin production at its new Texas factory, which has been delayed due to difficulties in securing major customers.