Shares of Tesla (NASDAQ:TSLA) and Samsung Electronics (USOTC:SSNHZ) rose on Monday following Elon Musk’s announcement of a multi-billion-dollar chip partnership between the two tech giants. The deal, valued at $16.5 billion, is expected to significantly support Samsung’s contract chip manufacturing business, which has struggled to turn a profit.
Samsung’s stock jumped nearly 7% on the news, while Tesla saw a 1.7% increase in U.S. premarket trading.
“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,” Musk said in a post on X.
The facility Musk mentioned is believed to be Samsung’s under-construction semiconductor plant in Taylor, Texas. The agreement could revitalize the site, which has faced setbacks due to delays and a lack of high-profile clients.
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house,” Musk added.
While the timeline for the AI6 chip’s launch remains unspecified, Musk previously noted that production of the A15 chip is expected to begin in late 2026, suggesting that AI6 will follow.
Samsung is currently the supplier of Tesla’s A14 chips, which power its Full Self-Driving (FSD) platform. Musk has also confirmed that Taiwan Semiconductor Manufacturing (NYSE:TSM) will be responsible for producing the AI5 chips, initially in Taiwan and later in Arizona.
Samsung officially confirmed the $16.5 billion agreement earlier, though it did not initially name Tesla due to confidentiality agreements with the client. The deal is set to last through the end of 2033.
There is still no confirmation on whether this partnership is related to broader trade negotiations between the U.S. and South Korea. The South Korean government has been advocating for cooperation in semiconductors and shipbuilding to avoid potential 25% tariffs from Washington.
This announcement comes at a pivotal time for Samsung, which has been under increasing pressure in the foundry business. The company has been losing market share to rival TSMC, particularly in the high-end chip segment where clients like Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) are key players.
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