Tesla Signs $16.5B AI Chips Deal With Samsung 

Tesla has entered into a $16.5 billion agreement with Samsung to produce its (Tesla’s) next-generation AI6 chip. 

The chips will be produced at Samsung’s new semiconductor facility in Texas, according to an X post by Elon Musk. 

The AI6 Chip

The AI6 chip, also known as Hardware 6, is designed to power a range of products, from the company’s Full Self-Driving (Supervised) system to its Optimus humanoid robots. 

It also supports high-performance AI model training in Tesla’s data centers. This all-in-one chip is a measure of Tesla’s desire to consolidate its hardware across multiple platforms. 

In effect, it reduces dependency on third-party chipmakers and gives the company more control over performance, safety, and cost.

The Chip Industry

For Samsung, this deal brings a much-needed boost. The tech company has faced difficulties in attracting major chip clients in recent years. 

By partnering with Tesla, Samsung gains a strong foothold in the AI chip market. Tesla’s chips will be manufactured at Samsung’s new fab in Texas. 

Elon Musk noted the factory’s proximity to his home. He added that he intends to oversee operations closely to ensure efficiency and speed. 

This hands-on approach, he said, would help accelerate production.

From TSMC to Samsung

While Tesla is working with Taiwan Semiconductor Manufacturing Company (TSMC) on the AI5 chip, the AI6 will be exclusively produced by Samsung. 

The AI5 chip, aimed primarily at Tesla’s driver-assistance systems, has completed its design phase. It will be manufactured initially in Taiwan and later in Arizona.

Samsung already manufactures Tesla’s earlier A14 chips. Now, with the AI6 contract in hand, Samsung has an even bigger role in Tesla’s future.

Musk also revealed that the $16.5 billion figure may grow. He stated that Tesla could spend “several times more” as production scales. 

He further confirmed that Samsung has agreed to collaborate with Tesla to improve manufacturing efficiency.

Tesla’s Chip Journey

Tesla began designing its own chips in 2019, moving away from Nvidia’s Drive platform. 

That year, it launched the Full Self-Driving Computer (FSDC), also known as Hardware 3, in all of its vehicles. 

This system used two redundant processors on the same board to ensure safety in autonomous driving.

Since then, Tesla has continued investing in custom chip design, a reflection of a new interest in AI and robotics. 

Custom chips allow Tesla to optimize both software and hardware to meet specific performance goals.

Samsung’s Win

For Samsung, this partnership is a breakthrough. The company has long sought to compete with TSMC, the world’s largest chip foundry. 

With Tesla on board, Samsung now has a high-profile customer and a powerful use case for its manufacturing capabilities.

Also read: Samsung Invests in Video Analysis AI Startup, Memories.ai

The Texas fab could also attract more U.S.-based clients in the AI sector, as Samsung is now better positioned to meet demands.