Samsung Electronics has struck a $16.5 billion agreement to manufacture next‑generation AI chips for Tesla at a new facility in Taylor, Texas, a deal hailed by CEO Elon Musk as “hard to overstate” in its strategic importance.

Under terms disclosed in a Samsung regulatory filing and confirmed by Musk on his X platform, the South Korean tech giant will produce Tesla’s AI 6 chips through 2033.

Musk said Samsung will allow Tesla engineers to “assist in maximizing manufacturing efficiency” and that he plans to “walk the line personally to accelerate the pace of progress.”

The Taylor plant, which received $4.75 billion in US Chips Act funding last December, had struggled to secure major clients. Ryu Young‑ho, senior analyst at NH Investment & Securities in Seoul, called the Tesla contract “quite meaningful” for the under‑utilized site. Alvin Nguyen of Forrester added that the deal benefits both parties, giving Samsung a high‑profile customer and helping Tesla simplify its domestic supply chain.

Samsung already produces Tesla’s AI 4 chips, which power its full self‑driving system, while Taiwan’s TSMC is slated to handle AI 5 chips.

The new agreement cements Tesla’s commitment to US‑based chip manufacturing and underscores the growing importance of advanced semiconductors for artificial intelligence and electric vehicles.

Samsung had postponed deliveries of ASML equipment and delayed the plant’s start to 2026 amid a lack of clients, but the Tesla deal is expected to reinvigorate the project.