Elon Musk signs $25bn AI deal

CEO Elon Musk has doubled down on Tesla’s AI future, despite the company’s recent woes, signing a massive deal with one of the world’s leading electronics makers.

Chief executive officer Elon Musk is doubling down on Tesla’s AI future, signing a $US16.5bn ($25.3 billion) deal with Samsung Electronics to build its next generation AI chips in the United States.

The agreement confirmed Monday by Musk will see Samsung produce Tesla’s AI6 chip at its plant in Taylor, Texas.

The AI6 chip is part of Tesla’s internal Dojo supercomputing project, designed to process vast amounts of data from its global fleet.

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.

— Elon Musk (@elonmusk) July 28, 2025

It’s a strategic risk at a volatile time.

Last week, Tesla reported a 42 per cent drop in year-over-year operating income for Q2 2025, from USD $1.6 billion to $923 million, a concern for investors.

Tesla shares rose 1.9 per cent in US premarket trading after the announcement and Samsung shared jumped 6.8 per cent, hitting its highest level in nearly a year.

While the initial deal is valued around $25 billion, Musk added on X that the figure is “just the bare minimum”.

“Actual output is likely to be several times higher,” Musk said in a post on X.

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Tesla is doubling down on its AI future. Picture: AP

WIN, WIN FOR TESLA, SAMSUNG

The deal will be a win for Samsung and assist its Texas facility, which has never had a major client and faced delays in operation since being completed in 2022.

Tesla is one of Samsung’s most high-profile contracts in years and a win for the company who has lost ground in the global chipmaking race.

Elon Musk has long insisted Tesla is “an AI company as much as a car company,”, and this new partnership will assist Tesla’s goals for vertical integration.

It will also support the US government’s priorities to strengthen domestic production.

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Samsung’s state-of-the-art chip plant in Taylor, Texas – the future home of Tesla’s next-generation AI6 chips under a landmark $16.5B deal. Photographer: Qilai Shen/Bloomberg

“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 A14. TSMC will make the A15, which just finished design, initially in Taiwan and then Arizona,” Elon Musk said.

Musk added that Tesla engineers will work closely with Samsung to improve production efficiency, and that he would personally oversee production lines.

The AI6 chips are critical for Tesla’s Full Self-Driving technology.

While Tesla has begun beta-testing its “Full Self-Driving v12” software with select users, critics and regulators have been sceptical of Musk’s project.

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Elon Musk says Tesla is as much an AI company as a car company. Picture: AP

The AI6 chips will also likely assist robotaxi platforms and possibly Tesla’s robotic projects, including a humanoid robot, Optimus.

Originally published as Elon Musk signs $25bn AI deal