Samsung has secured a significant win for its previously struggling foundry business as Tesla has decided to divide the manufacturing of its new AI5 accelerator between Samsung and TSMC. The chips will be produced at Samsung's plant in Taylor, Texas, and TSMC's facility in Arizona. This decision is part of a supply strategy following Samsung's previous $16.5 billion agreement to manufacture Tesla's upcoming AI6 processor. By using both top-tier foundries, Tesla aims to rapidly increase capacity while maintaining production within the United States. This dual-fab strategy is a pragmatic choice, allowing Tesla to avoid bottlenecks and build excess capacity for both its vehicles and expanding data-center needs. Elon Musk has praised Samsung's foundry capabilities, noting that the company already manages components of Tesla's AI4 platform, making the shared production of AI5 a logical step.

Meanwhile, Samsung is investing in next-generation High-NA EUV equipment and high-precision tools to close the gap with competitors on advanced nodes. The design of the AI5 chip is Tesla's desire for tight control of the componentry. Engineers have reportedly removed legacy GPU and image-signal blocks to create a more simplified chip optimized for real-time driving and AI workloads. This approach reduces die size and enhances cost efficiency. Tesla claims that the new architecture offers significantly better performance per dollar compared to its older designs, with company benchmarks indicating substantial improvements over AI4. In some cases, up to 40x performance improvements. Maybe the dream of Tesla Full Self-Driving (FSD) can now be accomplished with newer chips and better technology, if the conditions allow it.