Morgan Stanley: Tesla’s $16.5 Billion Samsung Chip Agreement Will Affect Just 1% of TSMC’s Revenue

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Morgan Stanley: TSMC and Tesla’s Relationship Remains Strong Despite Samsung Deal

Tesla’s recent $16.5 billion collaboration with Samsung to develop next-generation artificial intelligence chips is not expected to negatively impact Taiwan’s TSMC, according to analysts at Morgan Stanley. This agreement energizes Samsung’s lagging chip manufacturing sector, as it will produce advanced chips intended for Tesla’s electric vehicles and humanoid robots. The production is set to take place at Samsung’s Austin, Texas facility, with CEO Elon Musk personally overseeing the operations.

Despite Samsung being one of the few foundries with capabilities comparable to TSMC for cutting-edge chip manufacturing, TSMC continues to dominate the market. Following the announcement of the deal, Samsung’s stock surged 6% on the Korean exchange, indicating strong investor confidence.

In a recent financial note, Morgan Stanley suggested that the strategic partnership could potentially boost Samsung’s market valuation by as much as $50 billion. This optimistic forecast stems from an anticipated improvement in long-term utilization rates at Samsung’s Texas site, which has experienced several construction setbacks.

Samsung to Manufacture Advanced Chips with Cutting-Edge Technology

Under the terms of their agreement, Samsung will utilize 2-nanometer chip manufacturing technology to produce Tesla’s AI6 chips. In contrast, TSMC is currently in charge of manufacturing the A15 chips using a 3-nanometer process. Both companies aim to achieve 2-nanometer mass production by 2025, pending advancements in underlying technologies to ensure the robustness required for high-performance applications like Tesla’s processors.

Samsung’s manufacturing capabilities are projected to produce the A16 chips by 2027, while TSMC’s A15 chips are set for a January 2026 launch. Although the partnership between Tesla and Samsung may draw attention, Morgan Stanley believes that TSMC will experience only a minimal impact, estimating a mere 1% revenue decline for the Taiwanese manufacturer, as it will likely continue supplying chips to both Tesla and Musk’s AI venture, xAI.

In the wake of the announcement, Musk utilized social media to clarify that the stated $16.5 billion deal represents the minimum expected output. He emphasized that the design phase for the AI5 chips has recently concluded. A significant motivation for selecting Samsung was the opportunity for Tesla to actively participate in the chip production process, addressing Samsung’s challenges with yield rates, which have historically contributed to TSMC’s larger market share.

The Future Focus: Tesla’s AI6 Processors

The AI6 processors are anticipated to play a pivotal role not only in Tesla’s Full Self Driving (FSD) platform but also in its evolving range of humanoid robots, underscoring the importance of this partnership for the company’s future technological advancements.

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