Samsung has completed the tapeout of the AI5 chip for Tesla, Inc. (TSLA.US) and is now entering the mass production preparation phase.

Samsung Electronics has made important progress in the field of advanced process wafer foundry. Tesla, Inc. (TSLA.US) next-generation artificial intelligence chip AI5 has completed tape-out and is about to enter the mass production preparation stage at Samsung's factory in Taylor, Texas, USA. This order is regarded as a key opportunity for Samsung's semiconductor foundry business to turn around its loss-making situation. According to a report by Yonhap News Agency on Monday, Kim Jeong-kun, the chief engineer of Samsung's semiconductor foundry, publicly stated on LinkedIn, "Tesla, Inc.-Samsung AI5 chip has completed tape-out," and revealed that the chip will be produced at Samsung's 2-nanometer factory in Taylor and is "expected to be soon deployed in Tesla, Inc.'s latest products." Tape-out signifies that the chip has completed its final design and has been delivered to the factory, officially entering the mass production preparation stage. This AI5 order has direct financial significance for Samsung's semiconductor foundry business. Samsung Electronics is expected to record a loss of about 600 billion Korean won in the non-memory division in the second quarter of this year, and with Tesla, Inc. orders starting to ship from next year, analysts believe there is a possibility for this division to become profitable. Taylor factory receives first main orders The Taylor factory is expected to start initial operations by the end of this year and officially produce products for major customers from next year. The AI5 chip is an important mass production project to be undertaken by the factory after it starts operation and it is the first time Samsung's 2-nanometer process is applied to a large commercial order. Currently, Samsung Electronics is producing Tesla, Inc.'s existing AI4 chip at its semiconductor foundry production line in Pyeongtaek, South Korea, and the upgraded version of AI4 is also expected to be manufactured in Pyeongtaek. AI5 will be produced jointly by Samsung and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, AI6 is expected to be produced by Samsung, and AI6.5 will be specifically produced by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. This division of labor shows that Tesla, Inc. is building a diversified chip supply chain, with Samsung playing a role in the continuous production from existing products to next-generation products. Tesla, Inc.'s AI chip roadmap covers a variety of applications Tesla, Inc.'s AI chip development plan covers multiple generations, including the existing AI4, AI4 upgraded version, and subsequent AI5, AI6, and AI6.5. These chips are planned to be used in various applications such as Siasun Robot & Automation, autonomous vehicles, and data centers, with high demand and high requirements for foundry capacity and process capability. AI5 is the first product in Tesla, Inc.'s chip roadmap to adopt 2-nanometer cutting-edge technology. The leap in process nodes means higher performance density and energy efficiency requirements, and it also poses a substantial test for Samsung's 2-nanometer process in terms of mass production yield. Pressure on semiconductor foundry losses is expected to ease Samsung Electronics' operating profit for the second quarter of this year is currently estimated at about 89.4 trillion Korean won, with the memory division contributing approximately 84 trillion Korean won and the non-memory division experiencing a loss of approximately 600 billion Korean won. The semiconductor foundry business has long been under pressure and is one of the main factors affecting the overall performance of the non-memory sector. The landing of Tesla, Inc.'s AI5 order provides support for a large-scale production project for Samsung's semiconductor foundry. Analysts believe that with the Taylor factory officially starting production next year and beginning to ship to Tesla, Inc., the profitability of the semiconductor foundry division is expected to substantially improve. However, whether the 2-nanometer process can achieve stable mass production yield is still the core variable determining whether this business can successfully turn around its losses. This article is translated from "Wall Street SeeNews", author: Zhao Ying, GMTEight editor: Chen Siyu