Tesla has announced a $16.5 billion deal with South Korean technology company Samsung, over the manufacturing of its next-generation AI6 chip.
The deal will provide a leg-up for Samsung, who has struggled to get previous chip-making projects started after failing to strike deals with major clients.
Samsung will now look to bolster its chip-making presence in the industry, and Tesla will see the continuation of its AI chips as contributing to its ambitions to become known as an AI and robotics company.
Tesla Strikes Partnership With Samsung for AI Chips
Automotive company Tesla has signed a deal worth $16.5 billion with Samsung, that will now produce its next generation AI6 chips. “The strategic importance of this is hard to overstate”, Elon Musk wrote, when announcing the deal via X.
Tesla’s AI6 chip, or Hardware 6, is the company’s “all-in-one” chip design, which is capable of many functions across the company’s operations. This includes powering its driver assistance system and high-performance AI training in data centers.
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Tesla CEO Elon Musk is already working with TSMC (Taiwan Semiconductor Manufacturing Company) to make its AI5 chips, which are primarily built for Tesla’s Full-Self Driving technology. According to Musk, Samsung already makes Tesla’s AI4 chip.
Tesla Deal Offers Samsung AI Boost
While Samsung are already working with Tesla on its AI4 chip, this new deal represents a major boost for a company that has lagged behind in the race for AI chip-making.
Last October, it was reported that Samsung had postponed taking deliveries of chipmaking equipment to its Texas factory, because it had failed to win any major customers for the project. Samsung has delayed the plant’s operational start until 2026.
However, the deal with Tesla adds a very lucrative customer into its ranks. Musk even posted via X that he thought the deal could be worth more than the initial $16.5 billion, “Actual output is likely to be several times higher,” he wrote. The deal between the two companies is set to run until the end of 2033.
Samsung and Tesla Supercharge AI Ambitions With Deal
Both companies have strong AI ambitions. Samsung, on the one hand, will be competing with companies such as TSMC. The Taiwanese company already boasts clientele that includes Nvidia, Apple, and Qualcomm. With a client like Tesla, however, Samsung could hope to catch up.
“This is a critical point, as I will walk the line personally to accelerate the pace of progress.” Elon Musk, CEO of Tesla.
Tesla too has its own AI ambitions, as it drives to make the change from an automaker to an AI and robotics company. There is yet to be a timeline for when the new AI6 chips will begin production, but as the AI5 chips will be produced at the end of 2026, we can assume the AI6 will follow.
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