Nvidia and Tesla to invest $2.8bn in Samsung chip-substrate plant, report says

Nvidia and Tesla will jointly invest about 3.7 trillion won, or roughly $2.8bn, in chip-substrate production at South Korea's Samsung Electro-Mechanics, according to a report by the Korean newspaper Maeil Business Newspaper, cited by Reuters.

Under the reported deal, Nvidia would contribute about 2.6 trillion won and Tesla about 1.1 trillion won, tied to supply contracts running from 2029 to 2033.

Samsung Electro-Mechanics said it could not disclose details about its clients, and Nvidia and Tesla did not immediately comment, so the deal has not been confirmed by the companies.

What substrates are

Every advanced processor sits on a package substrate: a multi-layered base that connects the tiny chip to the circuit board and carries power and signals. The most advanced type, known as FC-BGA (flip-chip ball grid array), is essential for the large, powerful chips used in AI data centres and self-driving systems.

As AI chips grow bigger and more complex, they need larger and more sophisticated substrates, and only a handful of companies, mostly in Japan, South Korea and Taiwan, can make them at scale.

A new bottleneck

The AI boom has created shortages at several points in the chip supply chain, from high-bandwidth memory to advanced packaging. Customers who once simply placed orders are now paying upfront to secure future capacity, as Nvidia and Tesla reportedly are here.

For Nvidia, the world's most valuable chipmaker, securing substrates helps guarantee it can keep up with demand for its AI processors. For Tesla, which is developing its own chips for self-driving cars, robots and AI training, it secures supply for future products.

South Korea's role

The reported deal underlines South Korea's growing importance in the AI supply chain. Samsung and SK Hynix are leading suppliers of memory chips for AI, and Korean companies are increasingly investing in packaging and components as well. Nvidia's next quarterly results, due on November 17, will be watched for signs of how supply constraints are affecting its growth.