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After initially snubbing Samsung, Tesla has reportedly returned to the Korean firm to manufacture its next-gen Full Self-Driving (FSD) chips, at least a portion of it. The Texas-based EV (electric vehicle) company had previously chosen TSMC as the sole manufacturer of the Hardware 5 (HW 5.0) auto chips.
According to The Korea Economic Daily, this change of wind came after Samsung chief Lee Jae-yong met Tesla CEO Elon Musk in May. The duo discussed ways to strengthen their tech alliance during the meeting at the Samsung research center in Silicon Valley, San Jose. Lee offered to co-develop chips for fully autonomous vehicles and reportedly pitched “favorable contract prices” for manufacturing Tesla’s chips. Musk seemingly could not refuse the offer.
This wouldn’t be the first time Samsung would be manufacturing chips for Tesla. The Korean firm supplied FSD chips for its Model 3, Model 5, Model X, and Model Y cars in the past. But in December last year, Tesla decided to snub its long-time partner and switched to TSMC to manufacture its next-gen FSD chips. Samsung’s poor 4nm yields were said to be the reason behind this decision from the EV company.
However, Samsung has significantly improved its yield rates in recent months. Its 4nm yields are now on par with that of TSMC, while its 3nm yields have surpassed the Taiwanese firm. As such, Tesla has changed its mind and returned to Samsung. It plans to use Samsung-made 4nm HW 5.0 chips in its Level 5 autonomous driving vehicles, which should enter mass production three to four years from now.
Tesla is reportedly considering splitting the manufacturing of the next-gen auto chips between Samsung and TSMC. But it hasn’t completely ruled out the possibility of completely switching from TSMC to Samsung. Splitting next-generation chip production between the two is more likely though,” said an industry official familiar with the matter. The chips are expected to enter production next year, so Tesla still has time to decide.
Samsung will also manufacture self-driving chips for other companies
Along with Tesla, Samsung will also manufacture self-driving chips for Ambarella and Mobileye Global. The former is a fabless semiconductor design company, whereas the latter is an autonomous driving tech affiliate of Intel. To fulfill these orders, the Korean firm has significantly increased its foundry capacity at its Pyeongtack plant in Korea. It will also begin operations at its upcoming chip factory in Taylor, Texas by the end of 2024. Samsung expects its global contract chip manufacturing capacity to triple between 2022 and 2027.