The Chip Insider® – Samsung and Tesla’s $16.5B Deal: Who needs whom

Tesla's deal to make Tesla’s AI6 chip at Samsung’s new facility in Taylor, Texas, was groundbreaking in the scope of this partnership... what are the strategic and tactical implications it points to for both Tesla and Samsung?

While a vote of confidence, this was not a sign Samsung’s advanced process technology difficulties were behind it, because it was demand-side related. Samsung's problems have been … Samsung needed funding, while also needing to fix its advanced logic process woes. Tesla needed access to advanced manufacturing capacity in the US, while also needing a competitor to keep TSMC in balance. This quadra of strategic priorities frames what could be called a match made in heaven…

The bottom line is that this deal potentially puts Samsung back in the game in extreme advanced process technology, due to the partnership's groundbreaking scope, where Elon Musk can be directly involved in fixing Samsung's manufacturing issues. Elon is the world's manufacturing master when it comes to efficiency through breaking the "we've always done it that way" arthritic thinking of established production methods. He completely rewrote the books on manufacturing autos, rockets, and satellites.

"Execution is Everything." – John Doerr