Samsung confirms mass production of Tesla chips in the U.S. starting in 2027. A $16.5 billion order boosts the growth of the foundry business.

Bloomberg News has learned that Samsung Electronics has confirmed plans to begin large-scale production of Tesla (TSLA.US) chips at its Texas factory starting in the second half of 2027.

This deal will boost Samsung’s foundry business and support Tesla’s ambitions in artificial intelligence. Han Jin-man, head of Samsung’s foundry division, shared this latest development at a shareholder meeting held in Suwon, south of Seoul.

Previously, Elon Musk announced in July last year that Samsung’s new wafer factory in Texas would be dedicated to producing Tesla’s next-generation AI chips (such as AI6). Shortly after, the Korean tech giant confirmed signing a semiconductor supply contract worth $16.5 billion, lasting until 2033, with a focus on Tesla’s autonomous driving technology.

At last year’s shareholder meeting, Samsung Electronics Vice Chairman and Co-CEO Han Jong-woo apologized for Samsung’s initial missed opportunity in the AI chip market, which had led to declines in stock price and profits; he worked to reassure frustrated shareholders at the time.

However, the situation has improved since then. After a significant rise on Tuesday, Samsung’s stock price increased another 5.3% on Wednesday. Previously, NVIDIA CEO Jensen Huang stated that the company is producing NVIDIA’s new AI chips.

Analysts say Huang’s comments have fueled market expectations for Samsung’s foundry division. This division produces logic chips for Tesla, Apple, and Samsung’s mobile division, and after years of losing billions annually, it is expected to turn profitable as early as next year.