• Tesla AI5 chip production split between Samsung and TSMC.
• Musk praises Samsung’s advanced Texas facility equipment.
• Dual-foundry strategy ensures oversupply for Tesla vehicles and DCs in US.

Tesla has confirmed that AI5 chip production will be shared between semiconductor giants Samsung and TSMC, marking a change in the company’s original manufacturing plans. CEO Elon Musk revealed the arrangement during Tesla’s latest earnings call, citing practical and technological reasons for the dual-foundry approach.

The decision represents an expansion of Samsung’s relationship with Tesla. According to reports from CNBC and Investing.com, Samsung had already secured a multi-billion dollar contract in July to produce Tesla’s AI6 processor. Now, the South Korean chipmaker will also participate in AI5 manufacturing alongside Taiwan-based TSMC, which Musk had initially indicated would be the sole producer of the AI5 chip.

Geographic strategy and technical advantages

Manufacturing will take place at two US-based facilities: Samsung’s Taylor plant in Texas and TSMC’s facility in Arizona. Musk described Samsung as “an amazing company” during the earnings call, noting that the firm already produces Tesla’s AI4 computer. According to Investing.com’s coverage of the earnings transcript, Musk stated that having both foundries handle AI5 manufacturing “makes sense” for Tesla’s strategic objectives.

Notably, Musk highlighted a technical advantage for Samsung, stating that the company’s Texas fabrication plant possesses “slightly more advanced equipment” than TSMC’s Arizona site, as reported by Investing.com. The assessment appears supported by Samsung’s aggressive investment in cutting-edge manufacturing technology.

According to Korea Economic Daily, Samsung is set to receive its first high-NA EUV (extreme ultraviolet lithography) scanner – the ASML Twinscan EXE:5200B – later this year, with a second unit arriving in early 2026. The company plans to deploy these advanced machines for 2nm production, including manufacturing the Exynos 2600 application processor and Tesla’s next-generation AI chips.

Supply chain resilience

The dual-foundry strategy serves Tesla’s stated goal of maintaining an oversupply of AI5 chips, according to comments by Musk, as reported per Investing.com. The approach ensures a consistent supply for both Tesla’s vehicle fleet and its data centre operations, reducing dependency on a single manufacturing partner and mitigating potential supply chain disruptions.

Technical specifications and performance claims

Tesla introduced the AI5 chip at its 2024 shareholder meeting, as reported by CNBC. The processor is designed to support the company’s latest Autopilot hardware and process real-time self-driving signals – important functions for Tesla’s autonomous driving ambitions.

Musk has been deeply involved in the chip’s development, spending “almost every weekend for the past few months” working with the design team. The hands-on approach has resulted in significant architectural changes from the previous generation.

The AI5 design eliminates several components present in the AI4, including the legacy GPU and image signal processor, as noted by CNBC. Because Tesla is the sole client for the AI5, the company’s designers could optimise the chip specifically for Tesla’s requirements, removing legacy components that previously impacted performance.

According to Tech Buzz, Musk claimed the AI5 chips are half the size of full-reticle designs from competitors like NVIDIA and AMD, potentially delivering ten times the performance per dollar for AI applications. Musk stated that on certain metrics, AI5 provides performance up to 40 times greater than AI4.

Industry implications

Samsung’s inclusion in Tesla’s chip production represents a victory for the company as it works to compete more aggressively with TSMC in the advanced node manufacturing space. The partnership provides Samsung with a high-profile client for its US manufacturing operations and validates its technological capabilities in a competitive market.

For Tesla, the arrangement provides manufacturing flexibility and capacity assurance during a period of rapid expansion in both its automotive and AI computing businesses. The strategy also aligns with broader industry trends toward geographic diversification of semiconductor production, particularly with increasing emphasis on US-based manufacturing.

However, managing production in two different foundries introduces complexity in terms of quality control, yield management, and supply chain coordination. The success of the approach will depend on both manufacturers’ ability to deliver consistent quality and meet Tesla’s volume requirements.

Looking ahead

The AI5 production split sets the stage for Tesla’s next-generation AI6 chip, which Samsung is contracted to manufacture under the previously announced multi-billion-dollar deal. As both Samsung and TSMC ramp up their US manufacturing capabilities and invest in next-generation equipment, the competitive dynamics in advanced semiconductor manufacturing continue to evolve.

Tesla’s dual-foundry strategy for the AI5 chip reflects both practical supply chain considerations and confidence in Samsung’s advancing technological capabilities, while maintaining a relationship with industry leader TSMC.

As the automotive industry’s reliance on advanced semiconductors intensifies, such manufacturing partnerships will likely become increasingly important to meeting demand.

Want to experience the full spectrum of enterprise technology innovation? Join TechEx in Amsterdam, California, and London. Covering AI, Big Data, Cyber Security, IoT, Digital Transformation, Intelligent Automation, Edge Computing, and Data Centres, TechEx brings together global leaders to share real-world use cases and in-depth insights. Click here for more information.

TechHQ is powered by TechForge Media. Explore other upcoming enterprise technology events and webinars here.