On Sunday, Elon Musk doubled down on Tesla Inc.'s (NASDAQ:TSLA) in-house chip strategy, touting the upcoming AI5 as the most powerful and efficient inference chip for certain model sizes while promising that its successor, AI6, will push performance even further.
Musk Calls AI5 An ‘Epic Chip'
Musk took to X, formerly Twitter, and said that Tesla's AI5 chip could become "the best inference chip of any kind for models below ~250B params." He said the chip would offer "by far lowest cost silicon and best performance/Watt."
"AI6 will take that much further," he added.
His comments came after he announced having a "great design review" with the Tesla AI5 chip design team earlier in the day. At the time, he also said that Tesla had consolidated development from two architectures to one.
Samsung, TSMC And Tesla's Foundry Strategy
Tesla's silicon ambitions are supported by a $16.5 billion multiyear partnership with Samsung Electronics (OTC:SSNLF) to manufacture the AI6 chip domestically.
The deal, announced in July, positions Samsung to build Tesla's most advanced chips while Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) produces the AI5.
Analysts have said Tesla's dual-partner approach provides valuable foundry experience, potentially giving the automaker an edge over rivals that remain dependent on a single supplier.
Analysts See $1 Trillion Potential In Tesla AI
The bold chip comments come as analysts continue to view Tesla's AI business as a multi-trillion-dollar opportunity. Wedbush Securities analyst Dan Ives previously estimated that Tesla's AI and autonomous driving unit alone could be worth $1 trillion.
Cathie Wood of ARK Invest has also echoed that view, describing Tesla as "the largest AI project on earth" and projecting that autonomous taxi networks could generate $8 trillion to $10 trillion in global revenue over the next decade.
Industry Trends And Competition
Tesla's pivot to custom silicon mirrors moves by OpenAI and other tech players developing proprietary chips to reduce reliance on Nvidia Corp. (NASDAQ:NVDA).
Price Action: Tesla shares have fallen 7.50% year-to-date but are still up 62.22% over the past 12 months, according to Benzinga Pro.
Benzinga's Edge Stock Rankings show that TSLA maintains an upward trajectory across short, medium and long-term horizons. The stock carries a strong momentum score, though its value rating remains comparatively weak. More detailed performance insights can be found here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
