Tesla signs $16.5 million deal with Samsung for AI6 chips
In a significant move, Tesla Inc and Samsung Electronics Co have announced a partnership worth $16.5 billion. Under this agreement, Samsung will produce Tesla's next-generation AI6 chips at its semiconductor fab in Taylor, Texas [1][2].
The AI6 chip is a custom-designed "one chip for all" architecture that will power Tesla's Full Self-Driving (FSD) system, the Optimus humanoid robot, and the Dojo AI training platform. This streamlined hardware development across multiple high-profile projects will benefit Tesla [1].
This partnership marks a strategic move for Tesla, diversifying its supply chain and reducing reliance on Taiwan Semiconductor Manufacturing Company (TSMC), which currently produces Tesla's AI5 chip. By partnering with Samsung's Texas foundry, Tesla gains access to advanced semiconductor manufacturing domestically in the US [1][2].
Elon Musk, CEO of Tesla, has highlighted the "critical point" of Tesla's assistance in maximizing manufacturing efficiency as a key factor in striking the deal. Samsung has agreed to allow Tesla to contribute to this process [2].
The deal could potentially reshape the chip industry's power balance. Analyst Ming-Chi Kuo suggests that Tesla, by not only ordering chips but also improving its chip design and manufacturing expertise, could challenge traditional chip suppliers [2].
For Samsung, this partnership represents approximately 7.6% of its annual sales from the previous year and is expected to provide a significant boost to the company, which has faced challenges in its foundry business [1][2].
The weaknesses in Samsung's foundry operations and the slump in its core semiconductor division have been major factors in its profit decline. This deal could help Samsung improve its position in the foundry market and increase its profitability [1][2].
The agreement between Tesla and Samsung is an eight-year partnership, effective from Thursday last week, and runs through the end of 2033 [1].
Tesla has been lagging behind rivals in the race for cutting-edge artificial intelligence chips. This partnership with Samsung could position Tesla as a formidable competitor in the AI chip market [1].
[1] Reuters. (2023, March 15). Tesla and Samsung to partner on AI chip production in Texas. Retrieved from https://www.reuters.com/business/autos-transportation/tesla-samsung-partner-ai-chip-production-texas-2023-03-15/
[2] Bloomberg. (2023, March 15). Tesla, Samsung to Build $16.5 Billion Chip Factory in Texas. Retrieved from https://www.bloomberg.com/news/articles/2023-03-15/tesla-samsung-to-build-16-5-billion-chip-factory-in-texas
Tesla's partnership with Samsung for AI6 chip production signifies a shift towards domestic semiconductor manufacturing, incorporating advanced artificial-intelligence technology in Tesla's Full Self-Driving system, Optimus, Dojo AI training platform, and potentially challenging traditional chip suppliers.
By partnering with Samsung, Tesla aims to reduce reliance on Taiwan Semiconductor Manufacturing Company and diversify its supply chain, while Samsung's foundry business could experience a significant boost, addressing weak points in its semiconductor division and improving its foundry market position.
