Tesla, Nvidia Invest in Samsung Electro-Mechanics

Samsung Electro-Mechanics has secured investments of approximately 3 trillion won ($2.27 billion) from Tesla and Nvidia to bolster its production capacity for flip-chip ball grid array (FC-BGA) substrates, a key component in artificial intelligence (AI) semiconductors. The growing demand for these substrates is driven by the progression of high-performance AI chips, prompting Samsung Electro-Mechanics to accelerate its market expansion by attracting major tech corporations as long-term clients.

According to industry reports on October 22, Samsung Electro-Mechanics has entered into a long-term supply contract with Tesla for FC-BGA, and is constructing a specialized production line at its Sejong plant to cater to this demand. Tesla's investment is estimated at 1 trillion won, while Nvidia has committed 2 trillion won towards this initiative.

In September, Samsung Electro-Mechanics disclosed plans to invest a total of 4.27 trillion won into the expansion of its Sejong plant. The company intends to build a dedicated line at this facility to manufacture substrates for AI semiconductors utilized in autonomous electric vehicles and the humanoid robot 'Optimus'.

The FC-BGA supply contract between Samsung Electro-Mechanics and Tesla is set to span five years, from 2029 to 2033. Samsung Electro-Mechanics aims to initiate mass production in the second half of 2028 and supply these substrates to Tesla starting in 2029. Nvidia has also announced its partnership with Samsung Electro-Mechanics, revealing plans to enhance production facilities at both the Sejong and Busan plants.

The dedicated line for Nvidia will focus on producing AI computing chipsets and network substrates for data centers.

As markets for autonomous vehicles, humanoid robots, and AI data centers continue to expand, the demand for high-performance FC-BGA is anticipated to rise. By securing Tesla and Nvidia as clients, Samsung Electro-Mechanics has bolstered its production capacity and reinforced its competitiveness in the high-end substrate market. Tesla's Chief Executive Officer, Elon Musk, has also hinted that the forthcoming AI semiconductor 'A15' designed by Tesla will be produced by Samsung Electronics' foundry division, and the potential application of Samsung Electro-Mechanics' FC-BGA in this semiconductor is currently under discussion. A Samsung Electro-Mechanics official stated, "It is difficult to confirm parts related to clients."