Tesla, the brainchild of Elon Musk, has entered into a game-changing deal. The company will take part in producing next-gen AI6 chips.

According to Tesla CEO Elon Musk, the company has signed a $16.5 billion agreement with Samsung Electronics for the supply of chips. This deal will provide significant support for the South Korean high-tech giant, whose scope includes contract chip manufacturing. Following the positive news, Samsung Electronics shares surged by more than 6%.

“Samsung’s new massive plant in Texas will specialize in manufacturing next-generation AI6 chips for Tesla. It’s hard to overstate the strategic importance of this decision,” Musk said.

According to the entrepreneur, Samsung Electronics welcomed the partnership with Tesla. “It will enhance chip production efficiency. This moment is critically important, and I will personally oversee the process to accelerate progress,” Musk added.

The specific timeline for the release of the innovative AI6 chips has not been disclosed yet. Tentatively, production may begin by the end of 2026.

Currently, Samsung manufactures A14 chips for Tesla, which are used in its full self-driving (FSD) system. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) will be producing the new AI5 chips — initially in Taiwan, and later in Arizona, Musk noted.

At first, the South Korean high-tech giant refrained from disclosing the client’s identity, citing confidentiality. However, the company did confirm the $16.5 billion chip supply deal. Later, Tesla’s involvement was revealed. The contract is set to run until the end of 2033.

This agreement comes at a time when Samsung Electronics is facing growing pressure in the contract chip manufacturing space. Currently, the company lags behind its rival TSMC, mainly due to prolonged issues with the production of advanced chips for major clients such as Apple and Nvidia.