Tesla and NVIDIA will each invest 1.1 trillion Korean won and 2.6 trillion Korean won respectively to jointly build a production line for FC-BGA (inverted chip ball grid array substrates) with Samsung Electro-Mechanics. This is a new generation of packaging substrates for AI semiconductors. Currently, FC-BGA has become a new bottleneck in the AI supply chain. The investment in Samsung Electro-Mechanics' factory by these two companies will solidify Samsung Electro-Mechanics' position as a core supplier in the high-end substrate market of AI.
According to industry news on the 22nd, Samsung Electro-Mechanics has signed a long-term supply agreement with Tesla, establishing a dedicated production line at its Sejong factory. Under the agreement, Tesla will invest approximately 1.1 trillion Korean won in expanding the production line and purchasing equipment in exchange for stable supply guarantees over the medium to long term. These substrates will be supplied to Tesla's autonomous electric vehicles and the Optimus humanoid robots, which are equipped with AI chips.
The supply agreement covers a period of 5 years, from 2029 to 2033. Samsung Electro-Mechanics uses this agreement to share the financial burden of capacity expansion and secure long-term major customers; Tesla, in turn, ensures a steady supply of the substrates required for autonomous driving and humanoid robots.
Currently, Samsung Electro-Mechanics' production line is under construction, with plans to complete it by the end of next year. Equipment installation and trial production will be carried out in the first half of 2028, mass production will begin in the second half of 2028, and supply to Tesla is scheduled to start in 2029. In September last year, Samsung Electro-Mechanics disclosed that the expansion of its Sejong factory would involve a total investment of 4.27 trillion Korean won, of which 1.1 trillion Korean won will be covered by Tesla.
On the 21st local time, NVIDIA announced its collaboration with Samsung Electro-Mechanics at the GTC2026 conference held in Germany, declaring an investment to expand Samsung Electro-Mechanics' factories in Sejong and Busan. NVIDIA did not disclose the specific amount on-site, but media reports confirm that the investment is approximately 2.6 trillion Korean won. Samsung Electro-Mechanics will build dedicated production lines for NVIDIA to manufacture AI data center computing chips and network substrates.
AI chips have far superior computing power to traditional chips, with denser circuits, higher power consumption, and more heat generation. FC-BGA substrates can support high-density, fine circuits and have excellent heat resistance. The production capacity of high-end FC-BGA is highly concentrated, with the main manufacturers being Samsung Electro-Mechanics, Japanese Yageo, and Taiwanese Hon Hai Precision Industries; it is said that Yageo holds a market share of over 70%, while Samsung Electro-Mechanics is rapidly catching up.
Tesla's layout FC-BGA stems from the demand for complex computing power in autonomous driving and Optimus robots. In addition to Tesla, major tech giants are also making efforts in autonomous driving and humanoid robots, and the demand for FC-BGA is expected to explode. Business Research Insights predicts that this market will be worth $7.1 billion in 2026 and is expected to reach $13 billion by 2035.
Samsung Electro-Mechanics and Tesla have previously had in-depth cooperation. Elon Musk of Tesla revealed that Samsung Electronics' wafer foundry division will manufacture Tesla's next-generation chips, and Samsung Electro-Mechanics' printed circuit boards may be used in conjunction with these chips.
