Login to Continue Learning
This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Tesla’s $16.5 billion deal with chip manufacturer Samsung is unlikely to harm Taiwan’s TSMC, according to Morgan Stanley. After signing an agreement with Tesla to manufacture next-generation artificial intelligence (AI) chips for use in electric vehicles and humanoid robots, Samsung’s struggling chip manufacturing business received a boost. The arrangement will see Samsung produce Tesla’s AI6 chips at its Austin, Texas, facility, with Elon Musk overseeing the production process.
TSMC & Tesla Will Continue to Enjoy Close Partnership Despite Samsung Deal, Says Morgan Stanley
Although Samsung is TSMC’s only major competitor in leading-edge chip manufacturing technology, it holds a distant second place due to TSMC’s consistent output and manufacturing efficiencies. The deal was positively received by investors, as Samsung’s shares soared by 6% on the Korean stock market.
Morgan Stanley estimated that the Tesla partnership could add up to $50 billion to Samsung’s market value. Analysts based some of their estimates on improved longer-term utilization rates for Samsung’s Texas plant, which has been affected by construction delays. Under the deal, Samsung will use its 2-nanometer technology to manufacture Tesla’s next-generation AI6 chips, while TSMC currently uses a 3-nanometer process for the A15 chips. Both firms aim for mass production of 2-nanometer chips in 2025, but wait for new technologies to mature before relying on them for high-power chips such as Tesla’s processors.
Samsung will manufacture the A16 chips in 2027, with TSMC’s A15 chips expected to launch in January 2026. While Samsung won Tesla’s order for next-generation chips, Morgan Stanley believes that the revenue impact on TSMC will be minimal. According to the bank’s estimates, the Samsung deal will result in a mere 1% revenue loss for TSMC, as it expects TSMC to continue supplying chips to both Tesla and xAI.
Soon after the news broke, Musk tweeted key details about the deal. He revealed that the $16.5 billion figure represented only the minimum output and that the AI5 chips were in the final design phase. The deal was offered to Samsung because it allowed Tesla to assist with chip production, which is known for low yields due to Samsung’s advanced manufacturing processes.
Tesla’s AI6 processors are crucial for its Full Self-Driving (FSD) assisted driving platform and its humanoid robots. These chips will serve as a unifying platform for both applications, aligning with Musk’s vision of transforming Tesla into a robotics powerhouse.
📚 Reading Comprehension Quiz
According to Morgan Stanley, what is the potential market value addition for Samsung due to its deal with Tesla?
Please login or register to take the quiz and earn points!
