Tesla Partners with Samsung for $16.5 Billion HW6 Chip Deal, Still No Solution for Promised Full Autonomy

Tesla has inked a $16.5 billion deal with Samsung for HW6 chips, but still lacks a solution for HW3, a hardware generation necessary for promised full autonomy since 2016. The deal will run through 2033 and manufacturing is set to start in 2026. Samsung's chip foundry business will receive a significant boost, while Tesla continues to work on its self-driving capabilities.

Title: Tesla and Samsung Ink $16.5 Billion Chip Supply Deal; HW3 Challenges Remain

Tesla has signed a significant chip supply deal with Samsung Electronics, valued at $16.5 billion, which will run through 2033. The agreement, announced on Monday, aims to bolster Samsung's struggling contract chip-making business. The deal is expected to support Tesla's ongoing efforts to enhance its self-driving capabilities.

The agreement, which will start manufacturing in 2026, is a substantial boost for Samsung's foundry business, which has been facing intense competition from TSMC. The move comes as Tesla continues to work on its Full Self-Driving (FSD) capabilities, with the company still seeking a solution for HW3, a hardware generation necessary for promised full autonomy since 2016 [1].

The deal is also significant for South Korea, which is seeking U.S. partnerships in chips and shipbuilding amid last-ditch efforts to reach a trade deal to eliminate or reduce potential 25% U.S. tariffs. However, it remains unclear how the order would affect Samsung's plans to start production at its new factory in Texas, which has been delayed due to the lack of major customers [1].

Samsung's chip foundry business has been losing market share to TSMC, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to attract clients like Apple and Nvidia. The deal with Tesla is expected to help reduce losses at Samsung's foundry business, which exceeded ₩5 trillion ($3.63 billion) in the first half of the year [1].

Tesla, on the other hand, is still aiming to improve its self-driving capabilities. The company has been working on the HW3 upgrade and its next-gen AI5 FSD computer. The HW3 upgrade is expected to be a significant step-change improvement in the experience, similar to the experience that some have had in Austin so far. However, the production release of FSD Supervised is several months behind the FSD Robotaxi build, which is coming soon to customers [2].

The deal with Samsung is a crucial step for Tesla as it continues to develop its self-driving technology. While the company has made significant progress in recent months, it still faces challenges in fully realizing the potential of its FSD capabilities. The deal with Samsung is expected to provide the necessary chip supply to support Tesla's ongoing efforts to enhance its self-driving technology.

References:
[1] https://economictimes.indiatimes.com/tech/technology/elon-musk-says-tesla-samsung-electronics-sign-chip-supply-deal/articleshow/122944438.cms
[2] https://www.notateslaapp.com/news/2959/tesla-discusses-hw3-upgrade-and-its-next-gen-ai5-fsd-computer