
Tesla taps Samsung in $16.5B AI chip deal tied to new Austin-area facility
- by Austin American-Statesman
- Jul 28, 2025
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Samsung now makes Tesla’s AI4 chip, he said, and chipmaking giant Taiwan Semiconductor Manufacturing Co. will make the AI5 chip, the design of which was recently finalized, in Taiwan and eventually Arizona. RELATED: Could Tesla open a supercharger diner in Texas? Musk hints at possible location.
The new AI6 chip will be used across Tesla’s product line to run the self-driving software in its vehicles, in its Optimus robots and in data centers to power both of those products. Musk said Samsung has agreed to let Tesla “assist in maximizing manufacturing efficiency” and that he would walk the Taylor chip fabrication line himself.
The plant, originally expected to be operational by 2024, has faced delays and reports have suggested construction was slowed as contracted demand for microchips has lagged. Samsung has been losing ground in chip manufacturing, with its share of the global foundry market slipping to 7.7% in the first quarter from 8.1% in the previous three months, according to Taipei-based TrendForce. Taiwan Semiconductor’s share was nearly 68% in the first quarter.
Samsung has had operations in Austin since 1997. Its Taylor plant spans 6 million square feet on more than 1,000 acres near U.S. 79 and County Road 401 and is expected to employ about 2,000 people. It includes plans for two logic fabs and a research and development facility. In filings, the company has outlined the potential for up to 11 additional chip production facilities in the region in the coming decades.
The project received up to $4.75 billion in federal support under the 2022 CHIPS Act and Science Act and is part of Samsung’s larger $37 billion investment in Central Texas. The Korean company also could receive tax credits topping $9 billion.
While President Donald Trump and his administration originally criticized the Biden-era legislation that aims to rebuild the U.S. semiconductor industry, it has reversed course and used it to press companies like Taiwan Semiconductor and Samsung for additional U.S. investments.
For Tesla, buying components produced in the U.S. would allow it to avoid any chip tariffs, which the new administration has considered.
Tesla, headquartered in Austin since 2021, currently uses the earlier generation Samsung-made chips to power its Autopilot system. The new AI6 chips are part of the company’s ongoing development of self-driving and robotics technology, which Musk has positioned as key to Tesla’s long-term strategy.
The company reported last week its second-quarter profit was down 16% as revenue fell 12% and deliveries of its vehicles continued to plummet. It has not reported a profit increase since the July-September quarter of 2024. Its shares jumped Monday, though, and closed up just more than 3%.
Samsung Electronics Co. Ltd. is to report earnings this week. Its shares ended the Monday trading session up nearly 7% on the company’s home Korean Stock Exchange.
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