Samsung Foundry has finalized a contract with Elon Musk’s xAI to produce custom AI chips at its Taylor, Texas fabrication facility, sources familiar with the matter said. The agreement follows a $16.5 billion chip-manufacturing deal with Tesla announced in July.
Samsung ordered three advanced extreme ultraviolet (EUV) lithography machines from Dutch supplier ASML for the Taylor plant. Each machine costs about $200 million and supports production of AI chips on Samsung’s 2-nanometer process technology. The order signals plans to increase output at the facility, which has experienced delays from challenges in attracting customers.
The $17 billion Taylor fab had “virtually no customers” as of July, according to NH Investment & Securities analyst Ryu Young-ho. Samsung previously delayed delivery of ASML equipment in 2024 due to weak demand. Operations are now set to begin in early 2026, with full production ramping up by 2027.
xAI is the second Musk-led company to partner with Samsung Foundry, after Tesla. The startup develops the Grok chatbot, hires custom silicon engineers, and focuses on application-specific integrated circuits (ASICs) for large-scale AI tasks.
Samsung did not reveal the xAI contract value. Korean media outlet SamMobile reported in September that talks involved a potential $1 billion deal.
The partnership bolsters Samsung’s standing in the AI chip market, where it has lagged behind Taiwan Semiconductor Manufacturing Company (TSMC). The Taylor site’s location near Tesla’s Austin headquarters and xAI operations supports tighter coordination between designers and manufacturers.
