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Tesla is finally making a big splash in the world of autonomous driving by opening up the Full Self-Driving (FSD) capability of its Autopilot system to everyone in North America. With this move, however, comes a rapacious demand for chips, one that Tesla is now attempting to meet by not only tapping TSMC but also establishing its own chip-focused joint venture (JV) in China.
The Chinese publication IJiWei reported a few days back that Tesla has established a JV with the Swiss automotive semiconductor company, Annex. The JV boasts of $150 million in registered capital, with Annex owning a 55 percent stake, followed by the Jinan Zurich Annex Equity Investment Fund Partnership at 40 percent, and the residual 5 percent stake owned by Tesla. Bear in mind that the Jinan Zurich fund acquired Annex back in June 2022 for $5 billion.
Meanwhile, Tesla has reportedly placed a massive order for chips with TSMC. The order is reportedly so large that it will render Tesla one of TSMC’s top 7 customers next year. The chips will be manufactured on TSMC’s 4/5 nanometer nodes.
As a refresher, Samsung was responsible for manufacturing Tesla’s FSD 3.0 chips on its 14nm architecture. However, Tesla is now apparently pivoting away from Samsung and toward TSMC, as per DigiTimes’ reporting.
I would expect $TSLA to recognize one-time Def Rev of ~$1B in 4Q when FSD V11 is released broadly in the US at year-end. Most analysts will back it out of EPS as one time. The ongoing FSD take rate could increase once EV buyers know they can use FSD immediately after purchase.
— Gary Black (@garyblack00) November 23, 2022
Meanwhile, Tesla is expected to recognize around $1 billion in FSD-related deferred revenue in Q4 2022, as per the tabulation by Gary Black, the managing partner at the Future Fund:
“We estimate $TSLA has sold 400,000 FSD packages at an average of $9K since FSD became available. Assuming 300K sold in the US and 40% unamortized def rev, that translates to $1.1B in potential def rev release.”
For the uninitiated, Tesla introduced the vision-based iteration of its Autopilot with much fanfare a while back. The rationale here is that with eight high-resolution cameras and a high-tech neural network to interpret the visual cues, the Autopilot would mimic the way humans make decisions on the road.
Last year, Tesla unveiled the 7nm-based D1 chip to power its in-house Dojo supercomputer, which the company uses to train its Autopilot neural network by feeding visual clips captured by millions of electric vehicles that are already on the road. The EV company revealed quite a lot of details about its Dojo supercomputer at the recent Chips 34 event. Tesla plans to build its first Dojo exapod in 2023. In total, the company plans to build 7 such exapods to speed up the training of its Autopilot neural network.
