Musk: Samsung will play a greater role in Tesla chip production.

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Tesla is deepening its partnership with Samsung Electronics.

On October 22, during the company's third-quarter earnings call, CEO Elon Musk disclosed to investors that Samsung, along with long-term partner TSMC, will jointly handle the production of Tesla's current generation AI chip—the AI5. This differs from Musk's previous public statement that the AI5 would be produced by TSMC.

Musk explained that the goal of this adjustment is to achieve "excess production." He made it clear: "Our explicit goal is for the supply of AI5 chips to exceed demand.” He added that any surplus chips not used in cars or robots could be flexibly deployed in the company’s data centers.

For Samsung, obtaining part of the AI5 chip orders is a major victory, marking another breakthrough in the chip foundry market dominated by TSMC. According to reports, while Samsung remains second in the foundry industry, it is increasing its investment in its production center near Austin, Texas—where Tesla’s headquarters are also located.

Allocating part of the AI5 chip orders to Samsung is the latest example of the deepening collaboration between the two companies. Previous media reports noted that in July of this year, Samsung announced it had signed a $16.5 billion chip contract with an unnamed client, and Musk later confirmed that the client was Tesla.

At the time, Musk said that Samsung was already producing the previous generation AI4 chip, and the next generation AI6 chip would also be manufactured by Samsung. Now, Samsung’s responsibilities have expanded to include the current AI5 chip, indicating its role in Tesla's product roadmap over the next few years is becoming increasingly critical.

Dual Supplier Strategy: Aiming for “Excess Production” of Chips

Tesla’s dual supplier strategy aims to ensure sufficient computing power for its autonomous driving and robotics projects. Musk pointed out on the call that the AI5 chip will be produced simultaneously by Samsung’s plant in Texas and TSMC’s facility in Arizona.

The core of this strategy is to ensure redundancy and flexibility of supply. Musk said: “If we have too many AI5 chips prepared for vehicles and robots, we can always use them in data centers.”

This move shows Tesla is taking more proactive and conservative risk management measures in the face of global semiconductor supply chain uncertainty.

Not a Replacement: Complementary Relationship with Nvidia

Although Tesla has heavily invested in self-developed chips, Musk made it clear the company does not intend to replace its partnership with Nvidia. He emphasized: “To be clear, we are not aiming to replace Nvidia.”

According to Musk, Tesla’s strategy is to “combine” its own chips with Nvidia’s processors. Tesla’s own chips are mainly used for AI inference tasks in vehicles and robots, while Nvidia’s powerful GPUs continue to be used to train its complex AI models.

Tesla announced on Wednesday that the company currently has computing power equivalent to 81,000 Nvidia H100 chips. As early as 2019, Tesla stopped using Nvidia’s Drive chips in vehicles, switching to its own processors.

The Advantage of Self-Developed Chips: Pursuing “Extreme Simplicity”

Tesla insists on self-developed chips because its core advantage lies in the ability to design with “extreme simplicity” just for its own needs. Musk explained that since Tesla is the sole customer for its chips, the design work can be “fundamentally simplified.”

He mentioned that the design team can remove traditional GPU, signal processors, and other complex parts meant for other customers. This focus allows Tesla to optimize the efficiency and cost of its chips. Musk predicted that Tesla's chips might reach a top-level cost-performance ratio in AI—possibly up to ten times higher. He also complimented Nvidia for handling “an almost impossible level of complex requirements” very well, but said Tesla pursues “extreme simplicity.”

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