Elon Musk has announced that Tesla and Samsung Electronics have entered into a $16.5 billion chip deal, sending ripples through both tech and financial markets. The deal, which had been previously hinted at by Samsung but kept under wraps due to client confidentiality, will see Samsung manufacture Tesla’s upcoming AI6 chips at its new facility in Taylor, Texas.

Samsung’s stock jumped nearly 7% following the announcement—its highest since September of last year—while Tesla shares also edged up in U.S. premarket trading.

“This is a critical point,” Musk wrote on X. “I will walk the line personally to accelerate the pace of progress.” He also hinted that the actual value of the deal may far exceed the initial $16.5 billion estimate, calling it “just the bare minimum.”

For Samsung, the agreement is a much-needed win. Its foundry business has been bleeding, losing key clients to rival TSMC and suffering a projected 56% drop in Q2 profits. The Taylor plant, originally delayed due to lack of major customers, now has a lifeline—and a high-profile one at that.

Samsung currently manufactures Tesla’s AI4 chips used in its Full Self-Driving system. The new AI6 chips are expected to follow AI5, which TSMC will build in Taiwan and Arizona. Though timelines remain vague, analysts suggest AI6 chips could enter production by 2027 or 2028, noting Tesla’s history of target slippage.

Industry experts believe this partnership could help Samsung regain some footing in the competitive chipmaking market. The company currently holds just 8% of the global foundry share, compared to TSMC’s commanding 67%.

It’s still unclear if the deal has any connection to ongoing U.S.–South Korea trade negotiations. However, the partnership aligns with Seoul’s broader efforts to secure strategic alliances in tech manufacturing.

As AI chip demand skyrockets, both companies appear to be betting big on the next wave of autonomous and AI-driven vehicles—and they’re betting on each other to make it happen.