Samsung Electronics has signed a contract worth $16.5 billion with Tesla to manufacture the U.S. electric carmaker’s next-generation artificial intelligence (AI) chips, in what is the South Korean tech firm’s largest-ever chip foundry deal.

The chips will be produced at Samsung’s new facility in Taylor, Texas, under a long-term agreement that runs through 2033. The contract covers the production of Tesla's AI6 chips, which are designed for use in autonomous driving systems, robotics, and AI training infrastructure.

The deal gives Samsung a key client for its U.S. semiconductor foundry, which has faced delays and struggled to attract major customers. Construction of the Taylor plant began in 2021, but full-scale production is not expected until 2026.

Tesla CEO Elon Musk said via social media that the partnership is “strategically important” and confirmed that Tesla engineers will be involved in optimizing manufacturing processes at the facility. He also suggested that the overall output value may eventually exceed the initial $16.5 billion estimate.

Samsung’s shares rose more than 6% following the announcement, reflecting market optimism that the Tesla deal could help revive momentum for the company’s logic chip business.

The agreement comes as Tesla continues to build out its AI and autonomous technology platforms. The company has been designing its own custom chips in recent years to support projects such as its Full Self-Driving system and its humanoid robot, Optimus.

Neither company disclosed the specific production timeline for the chips, but the deal is expected to play a central role in Tesla’s hardware strategy over the next decade.