Samsung to make Tesla chips in $16.5B deal

What happened

Samsung will make semiconductors for Tesla, starting with the electric-vehicle giant's next-generation AI6 chips for its self-driving technology, Tesla CEO Elon Musk confirmed today.

The $16.54 billion contract will last through 2033 and is worth 7.6% of Samsung's 2024 revenue, making it the "biggest deal that Samsung's chip business has won from a single customer," according to the Financial Times.

Who said what

"The strategic importance of this is hard to overstate," Musk said on X. It's certainly a "major win" for Samsung, as it "struggles to catch up" with rival Taiwan Semiconductor Manufacturing to ink chipmaking contracts with tech giants, said The Wall Street Journal.

The Tesla deal "may also help them to attract other customers," Vey-Sern Ling, the managing director at Union Bancaire Privee in Singapore, said to Bloomberg.

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What next?

Samsung shares rose over 6% on the news. The Texas plant where Samsung is expected to produce the chips isn't slated to open until 2026. Analysts forecast chip production to begin by 2028.