Elon Musk confirms Tesla has signed a $16.5 billion chip contract with Samsung Electronics

Samsung Electronics has entered right into a $16.5 billion agreement for supplying semiconductors to Tesla, in line with a regulatory submitting via the South Korean company and Tesla CEO Elon Musk’s posts on X.  

The reminiscence chipmaker, which had now not named the counterparty, discussed in its submitting that the efficient get started pace of the agreement was once July 26, 2024 — receipt of orders — and its finish pace was once Dec. 31, 2033.

Alternatively, Musk upcoming showed that Tesla was once the counterparty in a answer on his social media platform X.

He additionally posted: “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 currently makes AI4.TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona.”

“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,” Musk stated on X, and instructed that the offer with Samsung may just most probably be even higher than the introduced $16.5 billion.

Samsung previous stated that main points of the offer, together with the identify of the counterparty, is probably not disclosed till the tip of 2033, mentioning a request from the second one celebration “to protect trade secrets,” consistent with a Google translation of the submitting in Korean on Monday.

“Since the main contents of the contract have not been disclosed due to the need to maintain business confidentiality, investors are advised to invest carefully considering the possibility of changes or termination of the contract,” the corporate stated. Its stocks rose 5% Monday.

Tesla was once a possible buyer, Ray Wang, analysis director of semiconductors, provide chain and rising generation at The Futurum Staff, instructed GWN earlier than Musk’s submit. Bloomberg Information had previous reported that Samsung’s offer was once with Tesla, mentioning a supply.

Samsung’s foundry provider manufactures chips in line with designs supplied via alternative corporations. It’s the second one biggest supplier of foundry products and services globally, in the back of Taiwan Semiconductor Production Corporate.

The corporate said in April that it aimed to begin 2 nanometer aggregate manufacturing in its foundry trade and keep main orders for the next-generation generation. In semiconductor generation, smaller nanometer sizes characterize extra compact transistor designs, which govern to larger processing energy and potency.

Native South Korean media retailers have additionally reported that American chip company Qualcomm may just playground an sequence for chips manufactured the use of Samsung’s 2 nanometer generation.

Samsung, which is ready to bring profits on Thursday, expects its second-quarter benefit to greater than halve. An analyst prior to now instructed GWN that the disappointing forecast was once because of vulnerable orders for its foundry trade and because the corporate has struggled to seize AI call for for its reminiscence trade.

The corporate has fallen in the back of competition SK Hynix and Micron in high-bandwidth reminiscence chips — a sophisticated form of reminiscence impaired in AI chipsets.

SK Hynix, the chief in HBM, has change into the principle provider of those chips to American AI behemoth Nvidia. Year Samsung has reportedly been running to get the actual model of its HBM chips qualified via Nvidia, a record from a native outlet suggests those plans had been driven again to a minimum of September.

Correction: This tale has been up to date to take away a connection with Musk deleting his submit.