Elon Musk confirms Tesla has signed a $16.5 billion chip contract with Samsung

Samsung Electronics has entered right into a $16.5 billion contract for supplying semiconductors to Tesla, based mostly on a regulatory submitting by the South Korean agency and Tesla CEO Elon Musk’s posts on X.  

The reminiscence chipmaker, which had not named the counterparty, talked about in its submitting that the efficient begin date of the contract was July 26, 2025 — receipt of orders — and its finish date was Dec. 31, 2033.

Nevertheless, Musk later confirmed that Tesla was the counterparty in a reply on his social media platform X.

He additionally posted: “Samsung’s big new Texas fab might be devoted to creating Tesla’s next-generation AI6 chip. The strategic significance of that is arduous to overstate. Samsung presently makes AI4.TSMC will make AI5, which simply completed design, initially in Taiwan after which Arizona.”

“Samsung agreed to permit Tesla to help in maximizing manufacturing effectivity. This can be a crucial level, as I’ll stroll the road personally to speed up the tempo of progress,” Musk stated on X, and steered that the take care of Samsung may seemingly be even bigger than the introduced $16.5 billion.

Samsung earlier stated that particulars of the deal, together with the title of the counterparty, is not going to be disclosed till the tip of 2033, citing a request from the second occasion “to guard commerce secrets and techniques,” based on a Google translation of the submitting in Korean on Monday.

“Because the principal contents of the contract haven’t been disclosed because of the want to keep up enterprise confidentiality, traders are suggested to speculate rigorously contemplating the potential of modifications or termination of the contract,” the corporate stated.

The corporate’s South Korean listed-shares rose over 6% in buying and selling on Monday to achieve their highest stage since September 2024.

Tesla was a possible buyer, Ray Wang, analysis director of semiconductors, provide chain and rising expertise at The Futurum Group, advised CNBC earlier than Musk’s put up. Bloomberg Information had earlier reported that Samsung’s deal was with Tesla, citing a supply.

Samsung’s foundry service manufactures chips based mostly on designs offered by different corporations. It’s the second largest supplier of foundry providers globally, behind Taiwan Semiconductor Manufacturing Firm.

The corporate said in April that it aimed to start 2 nanometer mass manufacturing in its foundry enterprise and safe main orders for the next-generation expertise. In semiconductor expertise, smaller nanometer sizes signify extra compact transistor designs, which result in higher processing energy and effectivity.

Native South Korean media retailers have additionally reported that American chip agency Qualcomm may place an order for chips manufactured utilizing Samsung’s 2 nanometer expertise.

Samsung, which is ready to ship earnings on Thursday, expects its second-quarter revenue to greater than halve. An analyst beforehand advised CNBC that the disappointing forecast was as a consequence of weak orders for its foundry enterprise and because the firm has struggled to seize AI demand for its reminiscence enterprise.

The corporate has fallen behind rivals SK Hynix and Micron in high-bandwidth reminiscence chips — a sophisticated sort of reminiscence utilized in AI chipsets.

SK Hynix, the chief in HBM, has change into the principle provider of those chips to American AI behemoth Nvidia. Whereas Samsung has reportedly been working to get the newest model of its HBM chips licensed by Nvidia, a report from a native outlet suggests these plans have been pushed again to at the very least September.

Correction: This story has been up to date to take away a reference to Musk deleting his put up and to repair a date.