On July 27, 2025, Elon Musk, the CEO of Tesla, stunned the world with an unexpected announcement of a new partnership with Samsung. Combined, they’ll manufacture Tesla’s next-gen AI6 chip at Samsung’s semiconductor plant in Taylor, Texas. The ambitious deal, at least $16.5 billion, is the largest endeavor ever to focus on regional equity. Musk thinks the final output will be much more than that. This agreement, especially under the investment climate at the time, was seen as a huge coup for Tesla. It aims to refine its vehicle technology ahead of the expected introduction of the AI6 chip in 2027.
During a subsequent post on July 28, 2025, Musk explained why this partnership was valuable to the bigger strategy. He underscored that Samsung’s plant would be exclusively for the production of the AI6 chip. That’s why Musk is personally adamant about the factory’s location being relevant. It’s beautifully located right next to his home, allowing him to keep a sharp eye on its progress.
“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
The deal includes an implementation of multi-billion-dollar semiconductor foundry production contract. This long-term supply contract is in force starting April 24, 2023, through December 31, 2033. This agreement, which extends through 2030, provides reliable access to cutting-edge semiconductors. It addresses the booming demand for artificial intelligence-related technologies.
Musk explained that Samsung has committed to working with Tesla to ensure the highest efficiency of manufacturing is achieved at the Taylor facility. This partnership has the potential to dramatically ramp up production capacity. Beyond that, it will enhance quality of output, ever more important as both firms compete in the fast paced semiconductor industry.
“The $16.5B number is just the bare minimum. Actual output is likely to be several times higher.” – Elon Musk
To facilitate this transition, industry experts have pointed out the myriad ways this partnership could be mutually beneficial to both companies. Kim Yang-pyung, senior researcher at the Korea Institute for Industrial Economics and Trade, welcomed the contract’s good influence. He underscored the importance of infrastructure in fueling economic growth and innovation. He said that it acts as a positive calling card, boosting the chances of more orders down the road.
Tesla’s new headquarters in Austin, Texas, is located a little over an hour from Samsung’s Taylor plant, making it easier than ever for the two companies to work together. This geographic edge can enhance connectivity, which increases operational efficiency. That will in turn help them better equip themselves to respond to increasing global market demands for cutting edge AI chips.
Tesla, for example, is preparing for the AI6 chip to debut in 2027. The exclusive partnership with Samsung is a smart strategic play that will continue to future-proof its technology offerings. Beyond the joint nature of the deal, the deal ensures – though not completely – a key supply chain component. More importantly, it underscores Tesla’s commitment to being at the forefront of automotive breakthroughs.
