Samsung, Tesla boost car chip partnership as Lee, Musk meet

Jay Y. Lee, executive chairman of Samsung Electronics Co., third from left, meets with Tesla Inc. Chief Executive Officer Elon Musk, center, in Silicon Valley on May 10. [Photo provided by Samsung Electronics]

Jay Y. Lee, executive chairman of Samsung Electronics Co., met with Tesla Inc. Chief Executive Officer Elon Musk for the first time in Silicon Valley on Wednesday to discuss measures to expand cooperation between the two companies in future industry areas, especially on semiconductors for self-driving cars.

Samsung and Tesla have had cooperation since 2019, as the Korean company’s foundry division has been supplying full self-driving chips to the global No.1 electric car maker. The meeting between the two company‘s leaders is seen as Tesla trying to secure supply of chips for its future autonomous driving vehicles and Samsung trying to grab top-place in any future self-driving chip market by supplying Tesla.

Autonomous driving chips control a self-driving car based on road and other traffic data collected from cameras and radar, practically being the “brain” of the vehicle. Samsung is eyeing Tesla’s next-generation self-driving chips and is in competition with Taiwan Semiconductor Manufacturing Co.

Samsung has been eyeing automotive chips as one of its key future growth engines on the back of growing demand for cars, following the transformation from cars into smartphones on wheels. A traditional automobile with an internal combustion engine requires about 200 to 300 chips, while a self-driving car is equipped with more than 2,000.

The price gap between chips for traditional cars and self-driving vehicles are big. For an ICE car, the average cost of semiconductors per vehicle is $414 (556,400 won), while it is $1,700 for a Tesla Model 3. According to market data tracker IHS Markit, the automotive semiconductor market is estimated to grow to 174.5 trillion won by 2028, from the 89.9 trillion won seen in 2022.

Against such a backdrop, Samsung is trying to move fast to lock-in new customers, following on the tails of the global top foundry player, TSMC. Some of Samsung’s efforts have come to fruition this year. In February, Samsung concluded a deal with artificial intelligence chipmaker Ambarella Inc. to provide 5-nanometer chips for self-driving systems. One nanometer equals 1 billionth of a meter. Ambarella is a U.S.-based fabless company, which develops high-performance, low-power advanced chips for autonomous vehicles.

Samsung has also won an order to provide chips for advanced driver assistance systems (ADASs) to self-driving vehicle chipmaker Mobileye Global Inc. The Israel-based fabless company specializes in autonomous driving chips and has about 70 percent of the market share in the camera-based ADASs chip market. The latest order won by Samsung had been reportedly made previously to its Taiwanese competitor. Samsung plans to increase sales in chips other than ones for mobile phones at its foundry business to more than 50 percent by 2027.

Alongside cooperation on self-driving chips, Samsung and Tesla are also expected to expand exchanges to develop next-generation information technology. Other than Tesla, Musk is also involved with other high-tech companies, including next-generation satellite systems developer Starlink Inc., Space Exploration Technologies Corp., the transportation system architecture company Hyperloop Technologies Inc. and the AI and neurotechnology companies Neuralink Corp. and OpenAI Inc.