Elon Outs $16.5B Samsung Chip Deal Tesla Asked To Keep Secret

Samsung Electronics has scored a $16.5 billion contract to make the silicon to power Tesla's next-gen self-driving computer hardware. The firm is set to produce this from a new fab it is building in Texas, according to Tesla CEO Elon Musk.

The Korean technology giant published a disclosure on its investor site today detailing a "supply agreement for semiconductor contract manufacturing" worth ₩22,764,764,160,000, or approximately $16.5 billion at current exchange rates.

Samsung's disclosure names the contracting party only as a "large global company," claiming that the name and other contract terms are being withheld "in accordance with the counterparty's request to maintain business confidentiality."

However, a post on the website formerly known as Twitter by Tesla chief Elon Musk appears to give away the game.

"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," said Musk.

We asked both companies for further comment.

Samsung already has a semiconductor fabrication site in Austin, Texas, and is constructing a new facility near the town of Taylor, expected to come online in 2026, although it has been subject to delays.

More than a year ago, Samsung said it was trying to secure $6.4 billion in funding under the previous US administration's CHIPS Act program to help with the costs of the new fab, and it was planning leading-edge logic production lines for 4nm and 2nm chips, as well as an R&D facility, and a packaging plant for High Bandwidth Memory (HBM).

Samsung already makes the key silicon for what Musk refers to as "AI4," or AI hardware v4, the tech at the heart of Tesla's vehicles. It is understood to be based on Samsung's Exynos processor design, itself based on the Arm architecture.

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According to Musk's posting, the next iteration of the silicon, AI5, is scheduled to be manufactured by Samsung's big rival in the semiconductor manufacturing stakes, Taiwanese firm TSMC. This will be produced initially in Taiwan, but later from one of the chip contract manufacturer's fabrication plants located in Arizona.

This means that production of the AI6 silicon could be several years away, and won't necessarily help Samsung with its current woes. Earlier this month, it posted an operating profit of ₩4.6 trillion ($3.3 billion), some way below the ₩6.3 trillion financial analysts had forecast.

Samsung continues to struggle with technical difficulties with its high-performance HBM3E memory, which was targeted at the lucrative AI market. Nvidia reportedly chose parts from SK hynix instead, and Samsung was so chastened by the experience that it replaced the leaders of its memory and foundry businesses.

Musk followed up his initial post on Twitter X with another claiming that Samsung had agreed to allow Tesla to assist in "maximizing manufacturing efficiency."

He added: "I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house."

Lucky Samsung employees. ®