Tesla gets one step closer to complete autonomy with in-house chip

The logo of Tesla is seen in Taipei Taiwan

The report indicated that Tesla was on a mission to develop its own chip for autonomous cars in order to be more vertically integrated, but that Tesla was potentially relying on building that "on top of AMD intellectual property". Tesla's silicon project is bounding ahead under the leadership of longtime chip architect Jim Keller, the head of Autopilot hardware and software since the departure of Apple veteran Chris Lattner in June.

Rosenblatt Securities analyst Hans Mosesmann said Tesla's selection of AMD was a blow to Intel, which has invested heavily in the market for autonomous vehicles.

According to new information acquired by CNBC, Tesla is trying to become more independent when it comes to autopilot enabling AI processing.

Tesla is one of the leading automakers working towards a complete self-driving solution where it will one day be possible to hop in your auto, plug in a destination, and let the vehicle do all of the work.

Elon Musk has said that Tesla will deliver completely autonomous driving capabilities by 2019. This could be something that helps AMD better compete against NVIDIA in the GPU space, with the helping hands (or should I say bank accounts and deals on semi custom designs) of Tesla?

While Tesla now partners with Nvidia for computing needs within their cars, this deal involves Elon Musk's company relying heavily on tech that's designed by external sources, and it's natural and logical for Tesla to prefer a little less reliance on factors that are beyond their control when building their self-driving machines.

The broker repeated a "buy" on AMD shares and $22 target price - compared to the current price of $13.70. While Tesla is getting help from AMD in developing the chip, Tesla will reportedly own the rights to it.

This deal is big for multiple reasons: Tesla now secures all of its GPUs from NVIDIA for self-driving cars, which I'm sure this deal will change that.

The US house repeated a "buy" on AMD and $19 price target for the stock.

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