South Korean company Samsung Electronics Co. has signed a $16.5 billion contract with Tesla Inc. for the production of artificial intelligence semiconductors.

This was reported by Bloomberg.

On Monday, the largest company in South Korea announced a deal worth 22.8 trillion won for chip manufacturing, which will last until the end of 2033. Tesla's CEO Elon Musk confirmed Bloomberg's report, stating that the upcoming factory in Taylor, Texas, will produce next-generation AI6 chips for Tesla.

Musk clarified that he will personally oversee the production line and has received authorization from Samsung to assist in optimizing the manufacturing process.

The signing of this contract comes at a time when Samsung is gradually losing ground in the semiconductor market. The company, which produces its own memory chips and semiconductors, is struggling to attract enough orders to fully utilize its production capacity. It has postponed the completion and launch of a new factory in Texas until 2026.

This contrasts with Taiwan Semiconductor Manufacturing Co., which still cannot meet the full demand. According to TrendForce from Taipei, in the first quarter of this year, TSMC held a dominant share of 67.6% of the global semiconductor foundry market. Samsung's share has decreased to 7.7% from 8.1% in the previous quarter.