Tesla, AMD Developing Self-Driving Car AI Chip

Tesla is reportedly working with AMD on a new processor for autonomous cars, thereby decreasing its reliance on Nvidia, whose GPUs are used in the company's Autopilot system.

Tesla isn't completely going it alone in chip development, according to the source, and will build on top of AMD intellectual property, CNBC reported.

A 50-person team is reportedly working on the chip, headed by former Apple and AMD chip designer Jim Keller, who joined Tesla from AMD past year.

The CNBC report said that its sources tied AMD and Tesla together, but neither AMD or Tesla will comment on the situation. Tesla silicon project is being headed by longtime chip architect Jim Keller who took over from Chris Lattner in June.

Tesla is expected to come up with its first-ever autonomous auto with self-driving capabilities in 2019.

AMD spiked after the news was first reported by CNBC on Wednesday after the market close, and is trading 0.69% higher Thursday morning. We took a test-drive in Nvidia's experimental self-driving vehicle back in January, and in March Nvidia announced it is working with Bosch on its own AI chip for self-driving cars. The chip would be more closely tailored to Tesla's specific needs, which could speed up the automaker's work to bring Level 5 autonomy (full-on self-driving capabilities) to Autopilot.

Tesla is known for its aspirations to vertically integrate its business as much as possible, and its partnership with AMD could be a move toward that goal. RBC maintains an Outperform rating on Nvidia and a Neutral rating on Tesla. In fact, the news until now Steves dismisses as "unsubstantiated" anyway; but even if true, whether AMD capture market share or not steal Nvidia's prime spot as "market leader". Already, Tesla vehicles feature Autopilot, a driver assist feature which helps with parking and braking.

Rosenblatt Securities Hans Mosesmann reiterates a Buy rating and $22 price target for AMD.

  • Eleanor Harrison