Samsung Electronics has entered into a $16.5 billion contract for supplying semiconductors to Tesla, based on a regulatory filing by the South Korean firm and Tesla CEO Elon Musk ’s posts on X.

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.

Samsung will produce AI6 semiconductors, the next-generation chip, for Tesla’s self-driving mode and other projects.