Samsung wins $16.5 billion deal to make Tesla’s A16 chips

Samsung will make Tesla’s A16 chip in a deal worth 22.8 trillion won ($16.5 billion). The chip manufacturer had filed a regulatory contract with an unnamed entity, but Elon Musk announced Tesla as the other party on X (formerly Twitter).

The deal will run through 2033 and utilize an upcoming plant in Taylor, Texas. Musk stated, “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.” This agreement marks a significant turnaround for Samsung, which, earlier this month, pushed back opening the Texas factory until 2026 due to a lack of customers.

Samsung currently produces the A14 chips that power Tesla’s Full Self-Driving platform. However, the A15 contract went to one of its biggest competitors, Taiwan Semiconductor Manufacturing Company (TSMC). According to Musk, that design has just been completed.

The new deal doesn’t come without strings — namely a lot of Musk breathing over the manufacturer’s shoulder. “Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” Musk stated in a subsequent X post. “This is a critical point, as I will walk the line personally to accelerate the pace of progress.” He went so far as to point out that the fabrication facility isn’t far from his Austin, Texas home.

If you buy something through a link in this article, we may earn commission.