Tesla AI5 Chip: Musk on Nvidia Relationship and Future Plans

Published Date : 23/10/2025 

Tesla CEO Elon Musk reveals that the company's new AI5 chip will be manufactured by Samsung and TSMC, while confirming that Tesla will continue to use Nvidia's GPUs for training AI models. 

Tesla's forthcoming artificial intelligence chip, dubbed the AI5, will be manufactured by Samsung in Texas and TSMC in Arizona, CEO Elon Musk announced during the company's third-quarter earnings call. Musk emphasized that Tesla is aiming for 'excess production' to ensure that any unused chips can be utilized in the company's data centers.

On the call, Musk stated, 'Our explicit goal is to have an oversupply of AI5 chips.' This strategy aligns with Tesla's broader vision of leveraging its technological advancements in both automotive and robotics sectors.

Tesla has a history of transitioning away from third-party hardware to in-house solutions. In 2019, the company dropped Nvidia's Drive chips in favor of its own processors. However, Musk clarified that Tesla will continue to use Nvidia's graphics processing units (GPUs) for training its AI models. 'We're not about to replace Nvidia, to be clear, but we do use both in combination,' he said. Tesla has announced that it now has a computing capacity equivalent to 81,000 of Nvidia's H100 chips.

This update comes after the departure of Peter Bannon, a former Apple engineer who led Tesla's chip design efforts, including the development of Dojo, a supercomputer aimed at enhancing the company's driverless technology. The AI5 chip, first announced in 2024, is the latest iteration of Tesla's Autopilot hardware, designed to process signals necessary for self-driving features.

In July, Samsung confirmed a $16.5 billion chip contract with an unnamed client, which Musk later revealed to be Tesla. He noted that the AI5 chip would be manufactured by both TSMC and Samsung at their U.S. facilities. The chip is designed to fit on a 'half reticle,' making it half the size of full reticle AI chip designs from competitors like Nvidia and Advanced Micro Devices (AMD).

Hyperscalers such as Google, Amazon, and Microsoft are also investing in their own AI chips to offer alternatives to Nvidia, driven by the potential for greater cost efficiency and performance for specific tasks. Tesla, alongside Apple, is one of the few companies designing its own silicon for both products and data centers.

Musk highlighted that Tesla's ability to focus on a single client's needs has simplified the chip design process. 'Tesla only has to satisfy requirements from one customer. That makes the design job radically easier and means we can delete a lot of complexity from the chip,' he explained. The design team has removed legacy components, including GPUs and signal processors, to optimize performance and cost.

'The AI5 chip could have the best performance per dollar for AI, maybe by a factor of 10,' Musk predicted. He acknowledged Nvidia's achievements in handling a wide range of requirements but emphasized Tesla's focus on 'radical simplicity.'

Musk's AI startup, xAI, which collaborates with Tesla, is a significant Nvidia customer. The company is currently constructing a large supercomputing facility in Memphis, Tennessee, based on high-end Nvidia Grace Blackwell chips.

This strategic move underscores Tesla's commitment to advancing AI technology while maintaining a strong relationship with industry leaders like Nvidia. 

Frequently Asked Questions (FAQS): 

Q: What is Tesla's AI5 chip?

A: The AI5 chip is Tesla's latest artificial intelligence processor designed for self-driving features and other AI applications. It is being manufactured by Samsung in Texas and TSMC in Arizona.

Q: Why is Tesla aiming for excess production of the AI5 chip?

A: Tesla aims for excess production to ensure that any unused chips can be utilized in the company's data centers, maximizing the value of its technological investments.

Q: Will Tesla replace Nvidia's GPUs?

A: No, Tesla will continue to use Nvidia's GPUs for training its AI models, complementing its in-house AI5 chips.

Q: What is the significance of the AI5 chip design?

A: The AI5 chip design is optimized for Tesla's specific needs, allowing the company to remove unnecessary components and achieve better performance per dollar compared to general-purpose AI chips.

Q: What other companies are investing in their own AI chips?

A: Hyperscalers like Google, Amazon, and Microsoft, along with Tesla and Apple, are investing in their own AI chips to offer more cost-efficient and specialized solutions for their AI applications. 

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