Tesla has signed a $16.5 billion semiconductor agreement with Samsung Electronics for production at Samsung’s new factory in Taylor, Texas, Elon Musk announced July 28. The deal positions the plant as the production site for Tesla’s next-generation AI6 chips, which will be critical to its future self-driving technologies.
Samsung’s Taylor facility, under construction since 2022, is part of a $37 billion investment in Central Texas. While the project has neared completion, reports earlier this month suggested that installation of chipmaking equipment had been paused until major customers committed. Musk’s announcement comes as a significant validation of the site’s strategic potential.
“Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip,” Musk posted on X. “Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. I will walk the line personally to accelerate the pace of progress.”
He also noted the $16.5 billion figure is a baseline and expects the actual value to be much higher over time. Bloomberg reported the agreement will run through 2033.
Chip Demand, Strategic Shifts
The Taylor site has faced headwinds as Samsung struggled to secure buyers amid global chip supply shifts. Competition from Taiwan Semiconductor Manufacturing Co. has intensified, as it secured top AI chip clients like Nvidia and Amazon. Samsung’s announcement that it will build its advanced packaging facility in South Korea rather than Taylor further fueled uncertainty.
Musk’s announcement sent Samsung’s Seoul-traded shares up nearly 7 percent, while key suppliers, including Soulbrain Holdings Co., also saw double-digit gains. Soulbrain is currently building a $600 million phosphoric acid plant in Taylor to support semiconductor production.
Long-Term Workforce Impact
Once operational, the Taylor site is expected to generate more than 3,500 manufacturing jobs and about 12,000 construction jobs, according to Samsung. The site also benefits from $4.7 billion in incentives through the U.S. CHIPS Act.
Tesla aims to use the AI6 chip as the backbone of its autonomous driving systems, including its planned robotaxi service. Musk has indicated these technologies, not vehicle sales, will drive Tesla’s long-term growth.
Samsung executives have declined to comment on the deal.
