Tesla has selected Samsung to manufacture its new A16 system-on-a-chip, developed by the carmaker for its next-generation artificial intelligence applications, including for autonomous driving, Optimus robots and AI data centers. The multiyear deal is reportedly worth $16.5 billion to Samsung and represents a major win for its foundry division. The South Korean company’s soon-to-open plant in Taylor, Texas will focus on making Tesla’s new AI6 chip, according to Tesla CEO Elon Musk. Samsung began producing Tesla’s A14 chip in 2023, but the A15 contract went to TSMC, which is in the testing phase using its 3nm N3P process.

Mass production on the A15 is expected to start in 2026, initially in Taiwan, later segueing at least in part to TSMC’s Arizona complex.

Musk announced the Samsung A16 deal in an X post, writing that “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.”

“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” Musk later added, noting “this is a critical point, as I will walk the line personally to accelerate the pace of progress” — “walk the line” being factory parlance for patrolling the assembly floor, which should be easy for Musk, who says “the fab is conveniently located not far from my house.”

Tesla designs specialized AI chips to run its Full Self-Driving vehicle and autonomous Robotaxi software. Tesla also has the D1 chip, also known as Dojo, designed specifically for data center use that is manufactured by TSMC using a 7nm process.

“Both projects are central to Tesla’s objective to restructure its business away from selling electric vehicles and into selling AI and robotics-based services like self-driving cars,” writes The Wall Street Journal.

Meanwhile, Samsung is also trying to stretch its wings, with South Korean AI chip startup Rebellions announcing it as the lead in a funding round that could go as high as $200 million. “Rebellions has been working with Samsung to bring its second-generation chip, called Rebel-Quad, to market,” CNBC reports.

Starting in 1993 Samsung had a formidable run as the world’s top manufacturer of memory chips and from 2017 through 2018 was the largest manufacturer of semiconductors, but has “been lagging behind TSMC for a while,” per Tom’s Hardware, which says the Tesla contract runs through 2033 and “represents a major win” for Samsung.

WSJ says TSMC began 2025 with a 67.6 percent share of global foundry revenue compared to Samsung’s 7.7 percent.

Maginative reports that the A16 Tesla deal is “Samsung’s largest foundry contract ever.” Musk posted on X that “the $16.5B number is just the bare minimum. Actual output is likely to be several times higher.”

The alliance is well-timed. Earlier this month, Engadget reported that completion of Samsung’s Taylor, Texas plant, which was originally scheduled for 2024, had been “delayed due to lack of customers.” Taylor is a suburb on the outskirts of Austin, where Samsung has operated a foundry since 1996.