Tesla Partners with TSMC and Samsung to Produce Next-Gen AI5 Chip for FSD and Robotics

Tesla CEO Elon Musk announced that the electric vehicle giant will collaborate with major chipmakers TSMC and Samsung to manufacture its upcoming AI5 chip, designed to power Tesla’s next-generation Full Self-Driving (FSD) technology and Optimus robot. Musk emphasized that production will take place at both companies’ U.S. facilities, with the goal of ensuring an “oversupply” of AI5 chips to support future data center needs.

The AI5 chip represents a major step in Tesla’s push toward self-reliant AI infrastructure. Despite its in-house chip development, Musk clarified that Tesla does not plan to replace NVIDIA (NASDAQ: NVDA) as a supplier for its data centers. Instead, the company will continue using Nvidia hardware alongside Tesla’s own chips, similar to how it currently operates with the AI4 chip. Musk added that any excess AI5 production could be repurposed for Tesla’s expanding data operations.

Earlier this year, Tesla reportedly signed a $16.5 billion AI chip deal with Samsung, reinforcing its commitment to scaling up AI and FSD capabilities. Musk described the AI5 as “at least 40 times faster” than the AI4 and highlighted its superior efficiency and cost performance, stating it could deliver “the best performance per watt and per dollar for AI.”

This announcement comes after Tesla reported a weaker-than-expected third quarter, as rising trade tariffs and AI research expenses offset record-high revenue. Investors were also cautious, with shares dropping around 4% in after-hours trading.

Despite short-term challenges, Musk reaffirmed Tesla’s long-term vision centered around AI, autonomous driving, and robotics. The company’s robotaxi pilot program in Austin, Texas, is set to expand to other major cities by year’s end—underscoring Tesla’s continued leadership in AI-driven mobility innovation.