Samsung Electronics will manufacture artificial-intelligence chips for Tesla in Texas under a $16.5 billion multiyear deal, a major win for its US foundry business that sent shares of South Korea’s largest company sharply higher.

Tesla Chief Executive Elon Musk confirmed the deal on X, saying Samsung’s new facilities in Texas will be dedicated to making the US company’s next-generation AI6 chip. “The strategic importance of this is hard to overstate,” he wrote.

The contract win comes as Samsung, the world’s largest memory-chip maker, struggles to catch up with Taiwan Semiconductor Manufacturing in the foundry business — making chips on a contract basis for customers such as Nvidia, Qualcomm and Apple, which design chips but don’t have their own factories to produce them. Samsung currently makes the AI4 chip, and TSMC will make the AI5 chip, Musk said.