Samsung has signed a $16.5 billion deal to produce AI chips for Tesla, a partnership publicly praised by Elon Musk. The South Korean tech giant disclosed the agreement in a regulatory filing, referring to an unnamed client, while Musk confirmed via his social media platform X that Samsung would manufacture Tesla’s next-gen AI6 chips at a new facility in Taylor, Texas.

Musk emphasized the significance of the deal, stating its strategic importance was “hard to overstate.” He also mentioned that Tesla would help optimize production efficiency, even promising to personally inspect the manufacturing process to speed things up. The Taylor facility is located close to Musk’s residence.

This agreement comes amid efforts by the Biden administration to strengthen the U.S. semiconductor industry, including a $4.75 billion investment in Samsung’s Texas operations through the Chips Act to bolster national AI and security capabilities.

The deal revives momentum for Samsung’s Texas project, which had struggled due to a lack of major clients. Analysts noted the importance of the agreement for both companies: Samsung gains a key customer for its underused U.S. chip plant, while Tesla secures a domestic production partner, reducing supply chain risks.

Samsung already manufactures Tesla’s AI4 chips used in its full self-driving system. Tesla’s AI5 chips are set to be produced by TSMC in Taiwan and later in Arizona. The new agreement with Samsung runs through 2033, though the client’s identity remains officially confidential at their request.

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