Tesla and Samsung Sign $16.5 Billion Deal to Manufacture AI Chips

Tesla has inked a $16.5 billion contract with Samsung for its next-generation AI chip supply

Elon Musk announced on X late Sunday that Samsung's new Texas mega-factory will exclusively produce Tesla's AI6 chips. "The strategic significance of this partnership cannot be overstated," he emphasized.

The AI6 (Hardware 6) chip represents Tesla's ambitious all-in-one semiconductor design capable of powering not only its Full Self-Driving (FSD) system but also the Optimus humanoid robot and high-performance AI training in data centers.

Musk revealed Tesla is currently collaborating with TSMC to manufacture AI5 chips, with the design phase recently completed. The AI5 generation, specifically designed for FSD, will initially be produced at TSMC's Taiwan facility before shifting to Arizona operations. Samsung is currently manufacturing the AI4 chips according to Musk's disclosures.

This deal marks a significant turnaround for Samsung's chip manufacturing division, which has struggled to attract major clients. Musk hinted in another post that Tesla's spending on Samsung chips could eventually surpass the $16.5 billion agreement.

"Actual production volumes could be multiple times higher," he projected.

In subsequent posts, Musk highlighted Samsung's commitment to let Tesla optimize manufacturing efficiency through collaborative processes.

"This is critical as I'll personally oversee production lines to accelerate progress. And the factory location near my home provides convenient access," the CEO stated.

Tesla shifted from NVIDIA's Drive platform to custom silicon in 2019. The initial FSD Computer (FSDC/HW3) launched in all vehicles that year featured two redundant systems manufactured by Samsung - a design choice ensuring fail-safe capabilities for autonomous driving systems.

As Tesla expands its technological ambitions, its focus on custom chips has intensified. These AI chips form the core of Tesla's transformation from automaker to leading AI and robotics company.