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A Samsung manufacturing facility in Texas will produce the newest generation of an advanced microchip for its yet-to-be rolled-out cars, Tesla CEO Elon Musk announced in a post on X.
“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,” Musk said.
The deal is a major win for the South Korean tech giant, which lost major clients like Google in recent years to competitors such as the Taiwan Semiconductor Manufacturing Company (TSMC) due to workflow issues and low production yields.
“Samsung agreed to allow Tesla to assist in maximizing manufacturing efficiency,” Musk continued in the post. “This is a critical point, as I will walk the line personally to accelerate the pace of progress.”
While Samsung already produces the AI4 and has been working with Tesla since 2017, it lost the AI5 deal to TSMC, who initially produced it in Taiwan and will soon be moving production to a plant in Arizona.
According to another post on X, the deal amounts to $16.5 billion (€14 billion), which Musk claims is “just the bare minimum. Actual output is likely to be several times higher”.
Besides Tesla vehicles, the upcoming AI6 chip is expected to power the technological advancement of Tesla’s humanoid robots and will be involved in AI model training.
What’s so “fab” about the new fab?
A fab is a tech industry term for a semiconductor fabrication plant or a cutting-edge factory where companies like Tesla get their custom computer chips built after they are designed.
There are only a few tech giants in the world that have the excruciatingly precise machinery to build 2-nanometer (nm) chips, which fit 50 billion transistors on a chip barely the size of a human fingernail.
The obsession with miniaturization in the tech world is part of a drive to achieve better computational power and combine it with greater energy efficiency.
The South Korean multinational conglomerate has been operating a semiconductor plant in Austin, Texas, since 1996. However, the new AI6 Tesla chip will be produced in a new plant in Taylor, around 50 kilometres away from the original fab.
“The fab is conveniently located not far from my house,” Musk said in the post.
Musk has lived near the launch site of his space exploration company, SpaceX, in Texas since 2021.
The Samsung deal is in line with the Chips and Science Act, a US bill passed in 2022, which aims to bring more of the highly profitable semiconductor manufacturing industry to the US, instead of relying on overseas producers.
