Enigmatic, mercurial CEO Elon Musk confirmed to Reuters news that Tesla has signed a deal with Samsung Electronics to manufacture and supply Tesla’s next-generation AI chips, the AI6. The contract is said to be valued at $16.5 billion.
Learn more on Samsung supplying the new Tesla AI chip
The move is a huge win for Samsung, which has struggled to catch up with other chip makers in the race to build AI capabilities. Tesla CEO Elon Musk told Reuters that Samsung will make the AI6 at its new chip factory in Taylor, Texas which has been long delayed as Samsung struggled to find “major clients.”
Samsung’s stock soared nearly 7% after news of the deal emerged earlier this week. Industry analysts say this deal could help the South Korean tech giant to finally turn a profit in its loss-making contract manufacturing business. Now, the company looks to finally gain ground on other major chip makers such as TSMC and SK Hynix.
Tesla Will Assist Samsung in Maximizing Efficiency, Musk ‘Will Walk the Line Personally’
Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency. This is a critical point, as I will walk the line personally to accelerate the pace of progress. And the fab is conveniently located not far from my house.
Elon Musk in a post on X
The Tesla CEO also said that the AI6, as well as other future inference chips, will be used in its self-driving vehicles and in its Optimus humanoid robot.
“The $16.5B number is just the bare minimum. Actual output is likely to be several times higher,” Musk said in another X post.
Both Samsung & Tesla Investors Around the World are Cheering the Deal
Investors are clearly cheering the deal. Not only did Samsung’s stock value soar, but Tesla shares were up 4.2% on the news. Considering the rather rough circumstances the company has struggled with such as worldwide sales declines, rocket launch crashes, muffed robotaxi launch, this news couldn’t have come at a better time.
Ryu Young-ho, a senior analyst at NH Investment & Securities, told Reuters that Samsung’s Taylor fab “so far had virtually no customers, so this order is quite meaningful.” In fact, Samsung had pushed off receiving deliveries of ASML chipmaking equipment for its Texas factory as it had yet to score a major customer for the project. There is no way the facility can be completed before 2026 – even with this inked deal.
Samsung Currently Makes the AI4 Chip
Samsung currently manufactures Tesla’s AI4 chip that powers its Full Self-Driving driver assistant system. TSMC is scheduled to make the AI5 chip, initially in Taiwan and eventually in Arizona. Industry experts say they don’t expect to see AI6 production at scale until 2027 or 2028.
In the meantime, Samsung hopes this deal signals a new era for them. While the company is the world’s largest memory chip maker, and it also offers logic chips in its foundry business, CEO Jay Y. Lee had launched a strategy to dramatically expand beyond its bread-and-butter memory chip business into contract chip manufacturing.
Learn More About Samsung Semiconductors…
The largest foundry in the world is TSMC with a 67% market share. Samsung has a long way to go – it currently holds only about 8% share of the foundry business.
Learn more about Samsung Semiconductors by visiting semiconductor.samsung.com.
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