Samsung, Tesla strike $16B chip deal for Taylor factory

[Neil Narayan]

Elon Musk announced July 28 that Tesla Inc. has signed a $16.5 billion deal to source semiconductor chips from Samsung Electronics Co. Ltd. at its Taylor factory, which is on track to open next year.

He added in another post, "The $16.5B number is just the bare minimum. Actual output is likely to be several times higher."

Bloomberg reported that the agreement will run through 2033. The next-generation AI6 chip will serve as the foundation of Tesla’s driving hardware suite for its vehicles. Samsung’s Seoul-traded shares rose 6.8% to their highest level since September, while its suppliers, like Soulbrain Holdings Co. Ltd., which is building a $600 million phosphoric acid plant in Taylor, jumped as much as 16%.

Late last year, Samsung finalized its incentives under the U.S. Chips Act for $4.7 billion, along with the timeline to begin operations in Taylor in 2026. The project — which moves Samsung's investment tally for Central Texas over the past few decades to $55 billion — will support the creation of about 12,000 construction jobs and more than 3,500 manufacturing jobs within the next five years, while also supporting workforce initiatives.