Musk says TSMC and Samsung to work on Tesla AI chip, no plans to ditch Nvidia

Investing.com-- Tesla CEO Elon Musk said on Wednesday that the company will have major chipmakers TSMC and Samsung working to produce its AI5 chip, and that the company had no plans to replace Nvidia as a provider of data center hardware. 

The AI5 is Tesla’s upcoming, in-house developed chip aimed at powering the electric vehicle maker’s next generation of full self-driving (FSD) technology and its planned Optimus robot. 

Responding to an investor question during a post-earnings call, Musk said that Tesla (NASDAQ:TSLA) will initially have TSMC (NYSE:TSM) and Samsung (KS:005930) working to produce its AI5 chip, and that the two companies will make the chip in their U.S. facilities. 

Musk said Tesla’s initial goal was to have an “oversupply” of AI5 chips, stating that any excess chips could be deployed towards data centers. Tesla had signed a $16.5 billion AI chips deal with Samsung earlier this year.  

He clarified that Tesla did not intend to replace NVIDIA Corporation (NASDAQ:NVDA) as a provider of data center chips, but that the company will use the AI5 in conjunction with Nvidia’s hardware. Musk also noted that Tesla already used its current-generation chip, the AI4, in combination with Nvidia hardware in its data centers. 

“We’re not about to replace NVIDIA, to be clear, but we do use both in combination, AI4 and NVIDIA hardware. The AI5 excess production, we can always put in our data centers,” Musk said in a post-earnings call. 

Musk spoke highly of the upcoming chip, claiming that it will be at least 40 times faster that the AI4. The chip is also at the the heart of Tesla’s efforts to streamline its AI and FSD efforts, after the company reportedly closed its Dojo supercomputer earlier this year. 

"The net effect is that I think AI5 will be the best performance per watt, maybe by a factor of two or three, and the best performance per dollar for AI, maybe by a factor of 10...Obviously, we need to actually get this chip made and made at scale," Musk said. 

Musk’s comments come after Tesla clocked a weaker-than-expected third quarter, as surging costs– related to trade tariffs and AI research– largely offset record-high revenue. 

Investors were also left  unimpressed by the strong revenue, given that it comes before the end of a lucrative EV tax credit scheme. 

Tesla’s shares fell about 4% in aftermarket trade.

Musk has largely touted AI, FSD, and robotics as the next major growth drivers for Tesla. The company is currently operating a robotaxi pilot program in Austin, Texas, while Musk on Wednesday flagged plans to expand its operations to other major cities by the end of the year.