Massive $16.5 Billion AI Chip Partnership with Samsung

Tesla secures a steady supply of critical technology by penning a chip partnership with Samsung, ensuring strength going forward.
Tesla signed a nine-year, $16.5 billion deal with Samsung to manufacture its next-generation AI6 chips at a new Texas fabrication center. These chips will be vital for Tesla’s FSD systems, Robotaxi network, Dojo supercomputer, and the Optimus robot. Tesla has cemented its foundation in Texas, becoming an Austin-based car company that now has a steady supply of critical semiconductor chips that are necessary for the future of the automaker and its products. This deal is good for both companies and the Austin area.

The chips were down

Samsung had paused construction on its massive semiconductor chip plant in Taylor, TX, which was due to open next year, because it hadn’t found a buyer for its chips. Thanks to this new agreement with Tesla, the company can continue construction on the plant and supply chips built in Taylor, which is only 30 miles northeast of Austin, to the automaker located in Austin. This supply agreement is good for both companies, ensuring their future and the chips produced that ensure highly complicated computer systems, such as those in Tesla vehicles, can function properly.

The shot in the arm Samsung needed

Samsung had previously acknowledged it had fallen behind in the AI chip race. Despite being one of the largest chip manufacturers in the world, the company had not kept up with other companies. Embracing a new partnership with Tesla could be the shot in the arm that makes a huge difference for Samsung as the new Texas location is dedicated to making Tesla’s next-generation AI6 chips, which will require some guidance from Tesla to assist in maximizing manufacturing efficiency. This should be a strong partnership for the next nine years, helping both companies continue to grow and flourish.

Tesla only makes EVs

Unlike many legacy automakers, Tesla only builds electric vehicles, which have come under fire from the recent changes in the federal government. A long-term deal with Samsung means a strong commitment to continued success, despite the challenging automotive landscape. With that said, it’s important to understand some of the pros and cons of EVs.

Pro: Performance and power

Electric vehicles can be extremely fast, as proven by the Tesla Model S Plaid, which can rocket to 60 MPH in less than two seconds. The instant torque delivered at the wheels allows these vehicles to be insanely quick and ready to show off when powered right. This instant speed makes EVs attractive to drivers looking for some excitement from behind the wheel.

Con: Battery life

Electric vehicle batteries don’t last nearly as long as most gas-powered engines. The engine block can function for decades when properly cared for, but the life expectancy of an EV battery pack is between 10 and 12 years. This means most batteries will outlast their estimated service life, but when it’s time to replace this part of the car, it’s extremely expensive.

Pro: Zero emissions

It’s well-known that vehicular emissions are harmful to people and contribute to smog in the atmosphere. EVs don’t have any tailpipe emissions because they operate using electricity. This means cleaner motoring and no harmful emissions put into the atmosphere, allowing owners to know they are positively contributing to saving the environment.

Con: Charging is a hassle

Americans love to take road trips. It’s a romantic part of being an American, especially if you take a trip just to see where the road will take you. Electric vehicles make taking road trips more difficult. It takes much longer to charge an EV battery at a fast-charging station than to refuel a gas tank. When hooked up to a 240-volt Level 2 charger in your home, it can take overnight to reach a full battery charge.
In addition to the charging time, EVs can only drive for up to 70% of their quoted driving range when you’re using fast-charging stations. You need to maintain at least 10% of the battery level when plugging in, and those chargers only reach 80% of the full charge while charging quickly. Once that level is reached, the charging time is significantly slower, reducing your useful driving range by 30%.

Pro: Less maintenance

Electric motors have fewer moving parts than combustion engines, which means EVs don’t require maintenance visits nearly as often as ICE vehicles. Some of the consumable parts, such as brake pads, don’t get used up as quickly thanks to the regenerative braking system used in EVs.

Con: Towing is a challenge

Electric vehicles can tow pretty well; the Rivian R1T is capable of towing up to 10,000 pounds, but when a trailer is hooked up, the driving range is immediately reduced. In some cases, these reductions can be as much as two-thirds of the original driving range, making it difficult to lean on electric trucks when you need to tow a trailer.

Tesla is leading the way toward autonomous driving

Partnering with Samsung for the next generation of AI chips will help Tesla move closer to having self-driving vehicles on the road. These new chips will be the most advanced semiconductor chips used in the market and should allow Tesla to move forward with its desire to offer the world autonomous vehicles and be the first to do so.