Samsung Signs $16m Deal to Supply AI Semiconductors to Elon Musk’s Tesla

Samsung Electronics has signed a $16.5 billion contract to supply semiconductors to Tesla, according to a regulatory filing. The company said it signed the long-term wafer fabrication deal with a “large global company,” effective from July 24 this year until the end of 2033.

Tesla CEO Elon Musk later confirmed it was Tesla via posts on the social media platform X. Samsung will produce next-generation A16 chips for the electric vehicle maker at its factory in Texas.

Samsung currently manufactures the A14 chip, while TSMC will produce the A15, the design of which was recently finished initially in Taiwan and then in Arizona in the US. The contract amounts to 7.6 percent of Samsung’s 2024 annual sales revenue of KRW 300.9 trillion (USD 217.7 billion), making it one of the largest foundry orders the company has ever won from a single client, according to Korea Economic Daily citing company sources.

The latest foundry contract, analysts said, would generate about KRW 2.5 trillion a year until the end of 2033 about 10% of Samsung’s estimated annual foundry revenue. Samsung’s USD 37 billion chip fabrication plant in Taylor, Texas is scheduled to begin operations in the second half of 2026.

Samsung Foundry Services

Foundry services refer to the outsourced manufacturing and testing of products—most commonly semiconductor wafers and chips, or metal castings—based on designs supplied by customers.

These services allow companies without in-house fabrication facilities or specialized expertise to bring their designs to life through external production capabilities. Samsung’s foundry service manufactures chips based on designs provided by other companies and is the second largest provider of foundry services globally, behind TSMC.