Editor’s Note: This story has been updated to include the latest developments
Elon Musk-led Tesla Inc. (NASDAQ:TSLA) has confirmed signing a massive $16.5 billion chip manufacturing deal with Samsung Electronics (OTC:SSNLF), marking a major win for the South Korean giant's foundry business as it fights for dominance in the booming AI chip market against rivals like Taiwan Semiconductor Manufacturing Co. (NYSE:TSM).
What Happened: On Monday, the South Korean tech giant disclosed in a regulatory filing that it had secured a multibillion-dollar chip production contract with an unnamed global client.
The deal, which officially began on July 26, 2024, runs through Dec. 31, 2033. While Samsung initially declined to name the counterparty, Musk later confirmed via X, formerly Twitter, that Tesla is the customer.
Musk revealed that the chips would be built at Samsung's new Texas fab and would power Tesla's next-generation AI6 chip, stating, "The strategic importance of this is hard to overstate."
He added that TSMC will handle AI5 chips, with production beginning in Taiwan and later moving to Arizona.
In a follow-up post, he said, "Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency," adding, "I will walk the line personally to accelerate the pace of progress."
Why It's Important: The deal offers a potential turnaround for Samsung's foundry arm, which has faced delays at its new Texas plant and struggles with advanced 2-nanometer yields.
It also comes as South Korea races to secure U.S. trade agreements to avoid steep tariffs on chips and other exports. Samsung shares were up 2.43% at the time of writing.
Benzinga’s Edge Stock Rankings show that Tesla maintains strong positive momentum over the medium and long term. More detailed performance metrics can be found here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
