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Last Update2025-08-01
Key Impacts
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Event Overview
The agreement underscores strategic reliance on semiconductor partnerships to advance autonomous vehicle technology, highlighting competitive pressures in AI-driven automotive innovation. It reflects cross-border collaboration in high-tech manufacturing and supply chain dependencies critical to scaling cutting-edge AI applications.
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Tesla Signs $16.5 Billion AI Chip Supply Deal With Samsung Electronics
On July 2024, Elon Musk confirmed that Tesla has signed a $16.5 billion contract with Samsung Electronics for the supply of artificial intelligence (AI) chips. The multiyear agreement involves Samsung manufacturing advanced AI semiconductor chips for Tesla, which will be used in Tesla’s self-driving systems and other AI applications. The chips are to be produced at Samsung’s semiconductor facility in Taylor, Texas.
The deal marks a significant strategic move for both companies. Samsung will produce the chips using its state-of-the-art 4-nanometer and 5-nanometer process nodes, technologies that enable high performance and energy efficiency. The agreement is set to last for several years and involves large-scale production to meet Tesla’s growing demand for advanced AI hardware.
Elon Musk, CEO of Tesla, stated that the deal helps secure long-term supply of critical AI chips. Musk commented on social media: "This multi-year contract with Samsung Electronics ensures that Tesla will have all the high-performance chips we need for our AI-driven vehicles."
This partnership positions Samsung as a key supplier for Tesla, replacing or supplementing Tesla’s previous contracts with other foundries. The substantial size of the agreement also had an immediate impact on the semiconductor industry, affecting the stock price of TSMC, another major chipmaker.
Immediate results of the deal include:
- Locking in $16.5 billion of contract value between Tesla and Samsung Electronics.
- Commencement of chip manufacturing at Samsung’s Texas plant, with production schedules based on Tesla’s future vehicle development timelines.
- Confirmation from Tesla and Samsung that the chips will primarily be used in Tesla’s next-generation AI systems for automotive use.
No additional details or technical specifications were disclosed regarding the specific models of chips or the quantities involved beyond the contract’s total value and intended use for AI applications in Tesla vehicles.