Samsung is set to manufacture AI chips for Tesla’s electric vehicles. The deal between the South Korean and American companies involves an amount of 22.8 trillion won (over 14 billion euros).
Samsung will not manufacture the chips for Tesla in South Korea, but in the US. This will take place in a new factory in Taylor, a town in the state of Texas, CEO Elon Musk wrote on X on Monday.
The location will be ready for production in 2026. It concerns the so-called AI6 chip, one of the newest chips for Tesla. This is an update to the Autopilot function, the car’s driver assistance system. “The strategic importance of this is difficult to overstate,” Musk emphasizes.
This is a major victory for Samsung Electronics, the branch of the company that produces chips. That part of the electronics group saw demand for AI applications decline in recent months. American restrictions on exports from China were the culprit. Samsung also suffered from increasing competition in the AI chip market.
Samsung Electronics is one of the largest manufacturers of smartphones in the world. The company is also the largest producer of memory chips, including high-quality chips for the AI hardware of market leaders such as NVIDIA.
Investors in South Korea reacted enthusiastically. Samsung’s shares on the Seoul stock exchange rose 5 percent to their highest level since September. A company spokesperson declined to comment due to confidentiality clauses in the contract.