Elon outs $16.5B Samsung chip deal Tesla asked to keep secret
- Reference: 1753708364
- News link: https://www.theregister.co.uk/2025/07/28/samsung_tesla_chip_deal/
- Source link:
The Korean technology giant published a [1]disclosure on its investor site today detailing a "supply agreement for semiconductor contract manufacturing" worth ₩22,764,764,160,000, or approximately $16.5 billion at current exchange rates.
Samsung's disclosure names the contracting party only as a "large global company," claiming that the name and other contract terms are being withheld "in accordance with the counterparty's request to maintain business confidentiality."
[2]
However, a [3]post on the website formerly known as Twitter by Tesla chief Elon Musk appears to give away the game.
[4]
[5]
"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," said Musk.
We asked both companies for further comment.
[6]
Samsung already has a semiconductor fabrication site in Austin, Texas, and is constructing a new facility near the town of Taylor, expected to come online in 2026, although it has been subject to delays.
More than a year ago, Samsung said it was trying to secure [7]$6.4 billion in funding under the previous US administration's CHIPS Act program to help with the costs of the new fab, and it was planning leading-edge logic production lines for 4nm and 2nm chips, as well as an R&D facility, and a packaging plant for High Bandwidth Memory (HBM).
Samsung already makes the key silicon for what Musk refers to as "AI4," or AI hardware v4, the tech at the heart of Tesla's vehicles. It is understood to be based on Samsung's Exynos processor design, itself based on the Arm architecture.
[8]Tesla bets on bot smoke screen as political and market realities bite
[9]Trump official warns they're putting the squeeze on CHIPS Act winners
[10]Intel abandons chip plants in Germany and Poland, confirms more layoffs
[11]Trump AI plan rips the brakes out of the car and gives Big Tech exactly what it wanted
According to Musk's posting, the next iteration of the silicon, AI5, is scheduled to be manufactured by Samsung's big rival in the semiconductor manufacturing stakes, Taiwanese firm TSMC. This will be produced initially in Taiwan, but later from one of the chip contract manufacturer's [12]fabrication plants located in Arizona .
This means that production of the AI6 silicon could be several years away, and won't necessarily help Samsung with its current woes. [13]Earlier this month , it posted an operating profit of ₩4.6 trillion ($3.3 billion), some way below the ₩6.3 trillion financial analysts had forecast.
[14]
Samsung continues to struggle with technical difficulties with its high-performance HBM3E memory, which was targeted at the lucrative AI market. Nvidia reportedly chose parts from SK hynix instead, and Samsung was so chastened by the experience that it [15]replaced the leaders of its memory and foundry businesses .
Musk followed up his initial post on Twitter X with another claiming that Samsung had agreed to allow Tesla to assist in "maximizing manufacturing efficiency."
He added: "I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house."
Lucky Samsung employees. ®
Get our [16]Tech Resources
[1] https://www.samsung.com/global/ir/reports-disclosures/public-disclosure-view.84435/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aIeemkQhL9a1kkOpVVaY_AAAABM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://x.com/elonmusk/status/1949673345567592869
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIeemkQhL9a1kkOpVVaY_AAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIeemkQhL9a1kkOpVVaY_AAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIeemkQhL9a1kkOpVVaY_AAAABM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2024/04/15/samsung_snags_64b_in_chips/
[8] https://www.theregister.com/2025/07/24/opinion_q2_tesla_bets_on_bot_smoke/
[9] https://www.theregister.com/2025/06/05/trump_chips_act/
[10] https://www.theregister.com/2025/07/25/intel_european_retreat/
[11] https://www.theregister.com/2025/07/24/ai_trump_plan_/
[12] https://www.theregister.com/2025/07/17/tsmc_q2_ramp/
[13] https://www.theregister.com/2025/07/08/samsung_q2_2025_guidance/
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIeemkQhL9a1kkOpVVaY_AAAABM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://www.theregister.com/2024/11/28/samsung_electronics_new_leadership/
[16] https://whitepapers.theregister.com/
So....
The hardware that was meant to be ready for "full self driving"/"true autonomy" (the real thing, not the marketing name) is at least two generations away from being available. Unless I'm mistaking the meaning of strategic importance?
Seems to me we're stuck in the "we just need to build it bigger to make it work" loop common to all the other AI startups that are struggling to deliver robust generalisable real world functionality.
Re: So....
Yes, the envisioned self-driving car will require a trailing lorry filled with equipment to process the data and then send back the driving instructions. The lorry must have a qualified driver and will be pulling a small nuclear reactor to power the computers that are filling the lorry's loading area completely. Unfortunately, the lorry will be requiring diesel fuel because an electric lorry in that weight class does not work yet. The energy requirements of the combined computers and lorry are too much for any small nuclear reactor. An optional umbilical between the small nuclear reactor and the self-driving car has been envisioned to recharge the batteries while driving.
Re: So....
Couldn't they just stick something like a Morris Minor in a spandex covering and pretend its a self driving vehicle?
Re: So....
"Couldn't they just stick something like a Morris Minor in a spandex covering and pretend its a self driving vehicle?"
That's already been done (and abandoned) see the Google Waymo driverless cars.
Re: So....
Seems to me we're stuck in the "we just need to build it bigger to make it work" loop common to all the other AI startups that are struggling to deliver robust generalisable real world functionality.
Actually, we're stuck in the much larger "we just need to feed the shared delusion that our company's valuation will keep going up and up and up" loop.
Corporate CEOs like Musk know that stock valuation is disconnected from (and typically runs contrary to) such real-world indicators as productivity, environmental impact, worker satisfaction, customer need, or technical viability. They have learned that valuation can be easily driven by vast, showy yet utterly wasteful expenditures. Hence the prevalence of over-priced acquisitions and mergers, as well as the farcical over-hyping of immature technologies like AI and 'self-driving.' Such moves are all money in the bank for clowns like Elon, even as they ultimately hollow out the actual worth of a company and wreak collateral damage in every direction.
Re: So....
What is really crazy is Nvidea I think has a P/E of 31, which is high, but they at least are growing qtr/qtr. Tesla on the other hand is 180 and has shrunk the past 2 qtrs. Worse, with trump in office, the milk of carbon credits is drying up and the Chinese EV makers are eating tesla's lunch abroad, so the future looks grim. So I have no doubt that musk wanted sammy to keep it secret until elon thought it was the best possible timing for a stock boost. And it appears to have worked. Stock is up even with the dreadful quarterly report. I give the guy credit, he plays the masses like a fiddle.
".....The strategic importance of this is hard to overstate," said Musk.
As if that will stop him....
Ironically, this is an example both of Musk overstating the strategic importance of the deal *and* of him doing so with apparent ease.
Meanwhile..
.. other car companies already have the chips but also use the far wider spread of sensors that make it easier to avoid children, emergency vehicles and lorries lying across a motorway.
Add to this Musk announcing to involve himself in the process and staffing that factory with competent people will prove a major challenge.
If Musk was able to run his vehicles on BS they'd be useful as there's no shortage of that, not just at Tesla..
Declining sales, shrinking profit margins, increased competition, and a share price that Elon seems to be maintaining by sheer force of will alone rather than any bright future - the question therefore is whether Tesla will still be around in its current form to take delivery of Samsung's chips by the time Samsung is able to deliver them...
And the question of whether Tesla will actually pay for the chips. Dodging bills seems to a key tool in Elon's toolbox.
We do seem to have reached the state where the share price is that much purely because that's what the people who invested want it to be worth.
Despite the apocalyptic company reports, there's no reason for it to drop until some other external force comes along that requires people to actually think about what their investments are worth, such as a recession or market crash. It's a good job America isn't currently being run by a mercurial, innumerate, narcissistic felon who holds grudges..... oh.
"I will walk the line personally to accelerate the pace of progress."
Previously you had to work one of Musk's companies for him to be able to act out his poorhouse manager fantasies on you but now in this exciting new development this bureaucratic requirement has been removed and Musk could turn up to your workplace one day to bully, push you around, and fascist salute in your face.
Texas
is BIG. Which is a good thing - What are the chances of a SpaceX launch gone horribly wrong (let's say a navigation/guidance issue) and debris falling on the Samsung FAB producing chips for Tesla (Autopilot)
Did he say 'Walk the line'? Or 'Snort the line'?!?
Well, ganja is a gateway drug after all!