Electric vehicle giant Tesla signed a $16.5 billion deal with Samsung Electronics to manufacture next-generation chips.

Tesla CEO Elon Musk confirmed the deal in an X post.

“Samsung’s giant new Texas fab will be dedicated to making Tesla’s next-generation AI6 chip. The strategic importance of this is hard to overstate. Samsung currently makes AI4. TSMC will make AI5, which just finished design, initially in Taiwan and then Arizona,” 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,” he added.

TechCrunch has more:

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.

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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.

“The $16.5B number is just the bare minimum. Actual output is likely to be several times higher,” Musk noted.

Samsung’s $25 billion semiconductor fabrication facility is about a 40-minute drive from Tesla’s Giga Texas factory.

Drone footage from 2024 provides an aerial view of the Samsung facility:

Full text:

This is Samsung’s new $25 billion semiconductor fabrication facility in Texas that will produce @Tesla’s future AI6 (HW6) chip.

The facility is a 40 minute drive from Tesla’s Giga Texas factory. Tesla just signed a new $16.5B deal with Samsung to produce these chips, but Elon Musk says that number is “just the bare minimum. Actual output is likely to be several times higher.”

Various Tesla products such as their cars and their Optimus robot will use this AI6 chip. This new Samsung facility is expected to be operational in 2026.

Note: This drone footage is from August 2024, which is the most recent I could find (from Central Texas Aerials).

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“This is excellent. Two companies just a few miles apart on Texas State Highway 130 crafting the future of AI. Truly one of the innovation centers of the globe right now,” Texas Gov. Greg Abbott said.

Reuters provided further info:

It was unclear whether the deal is related to ongoing trade talks between South Korea and the U.S. Seoul is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs.

A South Korean trade ministry official told Reuters he had not heard that the specific deal was part of the trade negotiations.

According to a senior analyst at NH Investment & Securities, Ryu Young-ho, Samsung’s Taylor factory “so far had virtually no customers, so this order is quite meaningful,” although the deal may represent a small portion of its logic chip revenue annually.

In October, Reuters reported that Samsung had postponed taking deliveries of ASML chipmaking equipment for its Texas factory as it had not yet won any major customers for the project. It has already delayed the plant’s operational start to 2026.

While no timeline was provided for AI6 chip production, Musk has previously said that next-generation AI5 chips will be produced at the end of 2026, suggesting AI6 would follow. Musk confirmed during Tesla’s earnings call last week that AI5 chips would enter “buying production” by the end of next year.

 

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