Memory-chip maker Micron Technology (MU, Financials), which supplies a large chunk of memory chips to Tesla, said the industry is facing tight availability and high prices.
Tesla Chief Executive Elon Musk said Micron had offered the supply on reasonable terms, and agreed capacity for years to come. The deal gives Tesla more visibility as it ramps up spending on artificial intelligence, autonomous driving and its Optimus humanoid robot program.
Memory chips are a key part of those systems, allowing data processing, storage and high-performance computing. Shares of Micron gained 2.5% in extended trade following Musk's remarks. Tesla shares fell about 4% on weaker-than-expected quarterly results.
Musk also stated Tesla has ordered equipment for a development chip-making unit and hopes to reveal additional details later. He cited investments by Samsung and Taiwan Semiconductor Manufacturing Co. in new U.S. plants that could satisfy Tesla's future AI computing needs.
The remarks underscore the importance of chip access in the next phase of Tesla's growth, on par with software development. Investors now will be looking to see if Micron's allocation translates into stronger automotive revenue and whether Tesla can secure enough supply to support its expansion plans.