Tesla CEO Elon Musk said that the U.S. automaker has entered into a $16.5 billion agreement to procure chips from Samsung Electronics, a decision aimed at strengthening the South Korean company's struggling contract chip manufacturing division.
"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," Musk said in a post on X on Monday.
If Musk was referring to Samsung's upcoming Taylor, Texas, plant, the deal could revive the project that has faced delays amid Samsung's struggles to retain and win major customers.
"Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house," Musk said on his social media platform.
Samsung had earlier announced the $16.5 billion chip supply deal without naming the client, saying the customer had requested confidentiality about the details of the deal, which will run through the end of 2033.
The deal comes as Samsung faces mounting pressure in the race to produce artificial intelligence chips, where it trails rivals such as TSMC and SK Hynix. This lag has weighed heavily on its profits and share price.
Samsung, the world's top memory chip maker, also makes logic chips designed by customers through its foundry business.
Bd-pratidin English/ ANI
