Tesla has signed a $16.5 billion deal to supply chips from Samsung Electronics, a transfer that might bolster the South Korean tech big’s unprofitable contract enterprise however is unlikely to assist Tesla promote extra EVs or roll out robotaxis extra shortly.
Tesla CEO Elon Musk mentioned late on Sunday that Samsung’s new chip manufacturing facility in Taylor, Texas would make Tesla’s next-generation AI6 chip. This might re-energize Samsung’s undertaking, which has confronted lengthy delays as a result of the corporate had hassle retaining and attracting main purchasers.
Samsung shares on Monday closed up 6.8% on hopes that this deal would assist the world’s prime reminiscence chip maker within the race to supply synthetic intelligence chips, the place it trails rivals corresponding to TSMC.
With manufacturing nonetheless years away, the deal is unlikely to assist Tesla tackle speedy challenges, together with ongoing declines in its EV gross sales and efforts to scale its rising robotaxi service. Tesla shares nonetheless rose 4.2% on Monday.
Musk has mentioned that future AI inference chips, together with AI6, can be deployed in self-driving automobiles and its Optimus humanoid robots, although he has famous the substantial computing energy might allow broader AI purposes. Inference chips are used to run AI fashions and make real-time selections.
“Samsung agreed to permit Tesla to help in maximizing manufacturing effectivity. It is a essential level, as I’ll stroll the road personally to speed up the tempo of progress. And the fab is conveniently situated not removed from my home,” Musk mentioned in a put up on X on Monday.
“The $16.5B quantity is simply the naked minimal. Precise output is prone to be a number of instances greater,” Musk mentioned in one other put up.
It was unclear whether or not the deal is said to ongoing commerce talks between South Korea and the U.S. Seoul is searching for U.S. partnerships in chips and shipbuilding amid last-ditch efforts to succeed in a commerce deal to remove or cut back potential 25% U.S. tariffs.
A South Korean commerce ministry official informed Reuters he had not heard that the particular deal was a part of the commerce negotiations.
Based on a senior analyst at NH Funding & Securities, Ryu Younger-ho, Samsung’s Taylor manufacturing facility “thus far had just about no prospects, so this order is kind of significant,” though the deal could characterize a small portion of its logic chip income yearly.
In October, Reuters reported that Samsung had postponed taking deliveries of ASML chipmaking gear for its Texas manufacturing facility because it had not but gained any main prospects for the undertaking. It has already delayed the plant’s operational begin to 2026.
Manufacturing timeline
Whereas no timeline was offered for AI6 chip manufacturing, Musk has beforehand mentioned that next-generation AI5 chips can be produced on the finish of 2026, suggesting AI6 would comply with. Musk confirmed throughout Tesla’s earnings name final week that AI5 chips would enter “shopping for manufacturing” by the tip of subsequent 12 months.
Lee Dong-ju, an analyst at SK Securities, expects manufacturing in 2027 or 2028, however Tesla has a historical past of lacking its targets.
Samsung presently makes Tesla’s AI4 chips, which energy its Full Self-Driving (FSD) driver assistant system, whereas TSMC is slated to make the AI5, initially in Taiwan after which Arizona, Musk has mentioned.
Samsung, the world’s prime reminiscence chip maker, additionally produces logic chips designed by prospects by its foundry enterprise. The Texas undertaking is central to Samsung Chairman Jay Y. Lee’s technique to develop past its bread-and-butter reminiscence chips into contract chip manufacturing.
It holds simply 8% of the worldwide foundry market, far behind TSMC, which has a 67% share, information from market researcher Trendforce present.
Pak Yuak, an analyst at Kiwoom Securities, mentioned the deal would assist cut back losses at Samsung’s foundry enterprise, which he estimates exceeded 5 trillion gained ($3.6 billion) within the first half of the 12 months.
($1 = 1,378.7000 gained)
—Heekyong Yang, Hyunjoo Jin, Wen-Yee Lee, Jack Kim, Akash Sriram, and Chris Kirkham, Reuters
Further reporting by Jihoon Lee.
