United Kingdom, July 28 -- Samsung Electronics has secured a $16.5 billion deal with Tesla to produce advanced AI chips.

The partnership - which marks one of the largest agreements between the two companies to date - was confirmed after Tesla owner Elon Musk revealed the EV company is the unnamed client referenced in Samsung's recent semiconductor announcement.

In a post on X (formerly Twitter), Musk said: "Tesla is indeed the client in Samsung's new chip deal. This will be critical in scaling our AI and self-driving efforts."

The chips will be manufactured using Samsung's cutting-edge 2-nanometre process technology, designed to support Tesla's next-generation self-driving and AI capabilities.

The deal underscores Tesla's push to redu...