By Kennedy Nalyanya
Tesla CEO Elon Musk announced that the company has signed a $16.5 billion deal with Samsung Electronics to source chips, specifically for its next-generation AI6 chip. This partnership aims to bolster the company's autonomous driving and AI infrastructure, with production set to begin at Samsung's Texas facility in 2026. The facility will utilize Samsung's 4-nanometer manufacturing process to produce high-performance, power-efficient chips designed for Tesla's vehicles and AI clusters.
This deal represents a significant win for Samsung Foundry, which has struggled to find major clients for its Texas factory. The partnership will help Samsung's foundry business, which has faced mounting pressure in the competitive AI chip market. Elon Musk emphasized the strategic importance of this partnership, stating that Samsung's giant new Texas fab will be dedicated to making Tesla's next-generation AI6 chip .
The agreement will run through December 31, 2033, and involves production of the Tesla AI6 processor, which is expected to ship towards the end of the decade. This chip will replace the company's next-gen AI5 processor, slated for mass production in 2026. Meanwhile, TSMC will manufacture Tesla's AI5 chips, initially in Taiwan and then in Arizona. Samsung currently produces Tesla's AI4 chips .
This deal comes at a challenging time for Tesla, with the company facing increased competition in the electric vehicle market, particularly from China's Xiaomi, which recently launched its electric SUV with 200,000 orders placed in under three minutes. Despite these challenges, the partnership with Samsung is seen as a strategic move to secure a dedicated pipeline of high-performance chips tailored to Tesla's needs.
The collaboration will also see Tesla assisting Samsung in maximizing manufacturing efficiency, with Musk stating that he will personally oversee the production process. This level of involvement underscores the importance of this partnership for both companies, as they work together to drive innovation in the automotive and AI industries.
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