Tesla CEO Elon Musk has confirmed that Tesla has signed a $16.5 billion semiconductor contract with Samsung Electronics. According to regulatory filings submitted by Samsung on Monday, the nine-year contract is widely seen as a boon to Samsung’s struggling semiconductor manufacturing division.
The contract, as outlined in the regulatory documents, came into effect on July 26, 2024, and will run until December 31, 2033.
While Samsung did not disclose the specific partner in the documents, Musk later took to the social platform X to confirm that Samsung will be building a new semiconductor plant in Texas dedicated to producing the next-generation AI6 chips for Tesla.
He added that currently, AI4 is manufactured by Samsung, and AI5 is handled by TSMC, initially produced in Taiwan and later transitioning to Arizona.
Analysts suggest that this $16.5 billion contract holds significant importance for Samsung and could be a turning point for its semiconductor manufacturing business.
Bloomberg Intelligence estimates that the contract could increase Samsung’s semiconductor manufacturing revenue by 10% annually and potentially pave the way for collaborations with other non-chip design companies.
Data from market research firm TrendForce shows that as of the first quarter of this year, TSMC held a 67.6% share in the global semiconductor manufacturing market, while Samsung held a 7.7% share, a slight decrease from the previous quarter. This collaboration with Tesla is seen as a signal of Samsung’s aggressive push in the 2-nanometer process and AI chip sectors.