Samsung begins trial production of Tesla AI chips at Texas foundry

Samsung Electronics has started trial production of 2-nanometer chips for Tesla ↗ 0.42% at its foundry in Taylor, Texas, moving ahead of its planned November timeline as surging AI chip demand reshapes the company's production strategy.

The Taylor fab recently began producing wafers for Tesla's next-generation AI5 processor, according to semiconductor industry sources cited by Seoul Economic Daily. Some production lines at the facility are now running AI5 chips while Samsung conducts yield verification, with the company aiming to complete mass-production qualification by the end of this year and begin full-scale supply in 2027.sammyfans

Tesla Deal Drives Early Startup

Tesla is the primary customer behind the accelerated schedule. Samsung signed a $16.5 billion chip supply contract with Tesla last year, with the AI5 chip at the center of the agreement. The AI5 is expected to serve as a core processor across Tesla's product lineup, including the Model 3 and Model Y electric vehicles, the CyberCab robotaxi, the Optimus humanoid robot, and AI data centers.sedaily+1

Samsung held an equipment move-in ceremony at the Taylor plant on April 24 and announced in July that it had reached tape-out for the AI5 chip. The fab's utilization rate has reportedly climbed to around 30 percent this month, and the facility's 2nm capacity is said to be fully booked, with additional orders from Broadcom ↗ 0.07% and Arm ↗ 0.89% already secured.sammyfans+3

A Foundry Counterattack

The early startup is central to Samsung's broader strategy to close the gap with TSMC Taiwan Semiconductor Manufacturing Company Limited ↗ 0.96%, the world's largest contract chipmaker, whose advanced-node capacity has been stretched thin by AI demand. Samsung held a 5.9 percent share of the global foundry market in the second quarter, compared with 5.4 percent for China's SMIC, according to TrendForce.trendforce+1

Samsung is also preparing to break ground on a second Taylor fab by year-end, with that facility expected to come online around 2030 using a 1.4-nanometer process. The $17 billion Taylor investment remains the largest single foreign investment in Texas.sedaily+1

"For Samsung's foundry business right now, cutting time is more important than anything," an industry official told Seoul Economic Daily. "To keep the large customers it has secured, it has to bring the Taylor plant up to full capacity quickly and move fast on follow-up expansion as well."sedaily