Samsung Electronics has secured a US$16.5 billion contract to manufacture Tesla’s next-generation AI6 chips, following Tesla’s decision to shut down its Dojo supercomputing team, a move that signals a deeper reliance on external chip partners.

The chips will be produced at Samsung’s Taylor, Texas facility through 2033 for use in Tesla’s Full Self-Driving technology.

Tesla CEO Elon Musk confirmed the company will focus on developing its AI5 and AI6 custom processors and reduce efforts on separate in-house chip designs.

Bloomberg reported that Tesla’s Dojo engineers have been reassigned, and the company will rely more on external partners, including Nvidia, AMD, and Samsung.

Samsung chair Lee Jae-yong has been in the US since late July and may meet with Tesla executives to discuss expanded collaboration, according to industry observers.

Industry sources note that foundries like Samsung increasingly work closely with customers on chip design, not just manufacturing.

🔗 Source: The Korea Herald

🧠 Food for thought

1️⃣ Strategic pivots can emerge even after substantial internal investments

Tesla’s Dojo shutdown represents a significant strategic reversal after years of dedicated development and investment.

The company first launched Dojo and unveiled its D1 chip in August 2021, positioning it as a multi-billion-dollar project aimed at building custom supercomputers for training machine-learning models behind Autopilot, Full Self-Driving systems, and the Optimus robot1.

Less than four years later, Tesla is abandoning this internal development in favor of a $16.5 billion external partnership with Samsung for AI6 chip manufacturing through 2033.

This timeline illustrates how rapidly strategic priorities can shift in the tech industry, even when companies have invested substantial resources in internal capabilities.

Musk’s rationale, that “it doesn’t make sense for Tesla to divide its resources and scale two quite different AI chip designs,” suggests that focus and resource allocation often take precedence over vertical integration, particularly when external partners can deliver comparable or superior results.

2️⃣ Project shutdowns can inadvertently strengthen competitors through talent migration

Tesla’s Dojo dissolution has created an immediate competitive risk through the departure of specialized talent.