Tesla signs $16.5B deal with Samsung to make AI chips

Tesla has signed a $16.5 billion deal to get its next-generation chips from Samsung. 

“Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip,” Elon Musk posted on X late Sunday evening. “The strategic importance of this is hard to overstate.”

Tesla’s AI6 (AKA Hardware 6) chip is the company’s bet on an all-in-one chip design that can scale from powering its driver assistance system known as Full Self-Driving (Supervised) to Tesla’s Optimus humanoid robots, all the way to high-performance AI training in data centers. 

Musk noted Tesla is working with TSMC to make AI5 chips, which just finished the design. The A15, a generation that is primarily built for FSD. will initially be made in TSMC’s Taiwan factory and then at its Arizona facility. Samsung already makes the A14 chip, according to Musk.

The deal is a boost for Samsung, which struggled to get its chip-making project off the ground after failing to attract and retain major clients. Musk said in another post that Tesla may end up spending more than $16.5 billion on Samsung chips. 

“Actual output is likely to be several times higher,” he said.

In a later post, Musk said 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,” Musk wrote.

Tesla switched over from Nvidia’s Drive platform to its own custom chip in 2019. That chip, known as the FSD Computer (FSDC) or Hardware 3, launched that year in all of its EVs. The FSDC, made by Samsung, consists of two duplicate systems right next to each other on one board — a design choice meant to create redundancy required for any automated driving system.

Since then, the company’s attention to its customs chips has expanded along with its ambitions. The AI chips are the centerpiece of Tesla’s push to move from an automaker to an AI and robotics company.