Tesla, Inc. ( TSLA ) shares are trading higher Monday after the company announced a $16.5 billion artificial intelligence (AI) chips deal with Samsung.

What To Know: According to the Financial Times, Samsung Electronics secured an eight-year, $16.5 billion contract to produce Tesla's next-generation AI6 chip, marking the largest chip order Samsung has ever received from a single customer. The chips will be manufactured at Samsung's new Texas fabrication plant, part of a broader $40 billion investment supported by subsidies under the U.S. Chips and Science Act.

The custom chip is designed to support Tesla's autonomous driving systems and humanoid robot technology. Tesla CEO Elon Musk said the AI6 chip could also be used in Tesla's data centers to train video-based AI models, reducing reliance on general-purpose GPUs from Nvidia and AMD.

Musk confirmed the deal on X, stating Samsung had "agreed to allow Tesla to assist in maximizing manufacturing efficiency" and added that he would "walk the line personally to accelerate the pace of progress." He called the deal strategically vital, noting the fabrication plant is located "not far from my house."

Musk said the $16.5 billion figure is "just the bare minimum," adding that "actual output is likely to be several times higher."

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TSLA Price Action: At the time of writing, Tesla stock is trading 3.88% higher at $328.35, according to data from Benzinga Pro.

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