Saad Ullah
⬤ Tesla (TSLA) is pushing ahead with AI5, its next-generation custom chip designed to handle Full Self-Driving, the Optimus robot, and the company's broader AI infrastructure. This isn't just an upgrade—it's a ground-up rebuild featuring custom neural cores, ARM CPUs, and integrated memory. Elon Musk noted that AI engineering takes up most of his time at Tesla, saying "AI5 will be good, AI6 will be great." The specs tell the story: 5× improvements in hardened block quantization and softmax operations, 9× more memory, 10× raw compute power, and a combined 50× performance jump over AI4.
⬤ Tesla stripped out everything non-essential to AI processing, including the image signal processor, to maximize performance per watt for machine-learning workloads. AI5 will draw more power than its predecessor, but the throughput gains—up to 10× in some areas—represent one of the company's biggest generational leaps. Engineering samples are expected in 2026, with full-scale production kicking off in 2027. The move mirrors what other vertically integrated tech companies are doing, with Tesla building an AI platform around silicon optimized specifically for autonomous systems and large-scale compute demands.
⬤ Samsung is manufacturing AI5 using its upcoming 2nm process, making this one of the first commercial chips on next-gen fab technology. The company is ramping up hiring in the U.S. as its new Texas facility nears completion, with full capacity expected by late 2026. That timing lines up perfectly with Tesla's production schedule and reflects a coordinated push across the supply chain. Musk has compared Tesla's annual chip iteration cycle to Apple's rapid silicon development pace.
⬤ AI5 could strengthen Tesla's position in autonomous driving, robotics, and high-performance AI compute. With AI6 already in the pipeline and expected to push capabilities even further, Tesla's shift toward vertically integrated silicon may influence how investors value the company, solidify its place in the AI hardware space, and shape broader market sentiment around TSLA's long-term tech strategy.
Saad Ullah
