Musk announces Tesla deal for Taylor-made Samsung chips Contract valued at $16.5 bilion
Tesla CEO Elon Musk announced Sunday that Samsung Electronics Co. Ltd.’s semiconductor foundry in Taylor will make advanced chips for updated Tesla models after the plant opens in late 2026.
The deal is valued at about $16.5 billion through 2033, Musk wrote on X, the Bastrop County-based social media platform that he owns along with Space X, The Boring Co. and Austin-based Tesla, which manufactures electronic vehicles.
The Tesla gigafactory is just 30 miles from Samsung’s $17 billion Taylor campus.
“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. (Taiwan Semiconductor Manufacturing Company Ltd.) will make AI5, which just finished design, initially in Taiwan and then Arizona,” Musk announced over the weekend.
A spokesperson for Samsung Austin Semiconductor, of which the Taylor plant foundry is an extension, could not be reached for comment.
On Monday, Samsung made a regulatory filing in South Korea —the multinational’s headquarters country — disclosing that it had entered into a contract valued at nearly 22.7 trillion in South Korean Won, which is worth about $16.5 billion in U.S. dollars.
The client’s name was withheld in the filing, which cited confidentiality.
Musk, however, had no qualms about publicly disclosing the deal to put the advanced chips in future generations of Tesla cars and trucks.
In follow-up posts on X, Austin resident Musk observed he lived close to the Samsung foundry and that he would walk the manufacturing line “personally to accelerate the pace of progress.”
Manufacturing semiconductors, especially the minuscule 2-nanometer chips Samsung is developing, is a delicate process in which a speck of dust can ruin an entire batch.
Online tech publication NotebookCheck.net reported last month that Tesla would need Samsung’s Taylor semiconductors because TSMC, Samsung’s main competitor in the chip market, wouldn’t be able to keep up with the demand from the automobile manufacturer even after opening the first phase of its $100 billion Arizona project.
Samsung’s advanced semiconductors are expected to make the computers about five times faster than those used in Tesla’s current Model Y car.
The implication of Musk’s announcement is that Tesla would be giving enough business to Samsung to sustain the first Taylor foundry through 2033. With 1,200 acres at its disposal in Taylor, the company could be investing up to $55 billion in additional fabrication plants at both the Taylor and Austin campuses in the coming years.
The Tesla deal is a big step toward Samsung meeting employment projections of about 2,000 people as part of its tax incentives agreements with Williamson County, Taylor and the Taylor Independent School District.
Delays in making the foundry operational caused the city and Samsung to renegotiate the terms of the agreements so that Samsung could still benefit from the tax breaks and the city would also get some extra perks.
Samsung’s Taylor operations will eventually provide about 2,000 permanent jobs and has already provided thousands of ancillary jobs in construction, food service and more.
In addition, suppliers to Samsung and the semiconductor industry have flocked to Taylor, Hutto and other nearby cities.
All the attention Samsung’s investment in the area created in recent years has also brought in other tech and manufacturing companies not related to Samsung, particularly from South Korea.
The deal strengthens an existing connection between Taylor and the auto maker, which ships the Model Y and Cybertruck around the country from a facility at the RCR Taylor Rail Logistics Park next door to Samsung.
The Tesla deal has bumped up the visibility of Taylor and Central Texas once again on the international stage.
Ben White, CEO of the Taylor Economic Development Corp., said in an interview last week before Tesla’s Samsung announcement that Taylor could expect additional big announcements about companies coming to the city.
Musk, considered the wealthiest person on the planet, became the subject of daily headlines when tasked by President Donald Trump with ferreting out waste and fraud in numerous U.S. government agencies during a stint with the Department of Government Efficiency.