Samsung Electronics Co.’s surprise $16.5 billion chipmaking deal with Tesla Inc. has breathed new life into a foundry business all but written off by many investors.

Samsung will produce Tesla’s next-gen AI chips at its semiconductor plant set to open next year northeast of Austin in Taylor.

Musk noted Tesla is working with TSMC to make AI5 chips, which just finished the design. The AI5, a generation that is primarily built for FSD, will initially be made in TSMC’s Taiwan factory and then at its Arizona facility. Samsung already makes the AI4 chip, according to Musk.