Elon Musk pushes chip suppliers to move at 'light speed' on ambitious Terafab project

Musk Asks Suppliers to Move at 'Light Speed' on Terafab Project

The project aims to produce cutting-edge chips for artificial intelligence, robotics, and space, with a goal to supply a significant amount of annual computing capacity, but its feasibility and timeline are uncertain. Elon Musk's lieutenants have reached out to chip industry suppliers including Applied Materials Inc., Tokyo Electron Ltd. and Lam Research Corp. for his envisioned Terafab, early steps in an audacious and likely arduousBloomberg Terminal attempt to break into the production of cutting-edge chips. Staff working for the joint venture between Tesla Inc. and SpaceX have sought price quotes and delivery times for an array of chipmaking gear, people familiar with the matter said. In past weeks, they've contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools, according to the people, who asked not to be named disclosing private discussions. The Terafab team also asked chip manufacturing partner Samsung Electronics Co. for support. The South Korean company instead proposed allocating more capacity for Tesla at its planned factory in Taylor, Texas, according to the people. The outreach suggests Musk is pressing ahead with Terafab in the face of skepticism from the semiconductor industry. The project, as envisioned, aims to reshape the chipmaking landscape and propel the world's richest person into an arena dominated by Taiwan Semiconductor Manufacturing Co. Intel Corp. said it will join the Terafab initiative, with its Chief Executive Officer Lip Bu Tan posting a photo of Musk on a recent visit to the chipmaker's Santa Clara office. Musk's representatives have asked for speedy price estimates while providing minimal information about the products to be made. In one case, they asked a supplier on a holiday Friday for an estimate to be delivered the following Monday, one of the people said. Musk wants to move at "light speed," the person was told. The Terafab project -- which has a mind-boggling goal to supply 1 terawatt of annual computing capacity -- is the latest ambitious undertaking by Musk. While Tesla designs its own autopilot FSD chips, Musk's companies have never manufactured semiconductors. Yet he's now proposing to make them at a scale that would dwarf the world's current capacity, starting with a pilot line in Austin that taps Tesla's existing EV factory and infrastructure. The idea is that the chips would be used to support Musk's artificial intelligence business xAI, a line of humanoid robots and data centers in space -- ambitions that many in the semiconductor industry don't take seriously. The ultimate scale of the project, and whether it expands into a single mega site or multiple locations beyond Texas remains unclear. Read more about Terafab Musk's Terafab Fever Dream Exposes Reality of the AI Chip Crunch Musk Says Tesla, SpaceX, xAI Chip Project to Kick Off in Texas Iran War Chokepoints Begin to Cast Doubt on Global Chip Supply Why the AI Boom Will Make Phones, Cars, Devices More Expensive The project is offering to pay a considerable amount above the quoted figures if suppliers give Terafab priority, according to the people. No fixed orders have been placed as it's not clear what technology will be used or where the chips will be made, but the first step will be construction of a pilot line to process 3,000 wafers per month, the people said. The goal is to begin silicon manufacturing by 2029 and then scale up, one of the people said. The project would require something like $5 trillion to $13 trillion in capital spending, according to estimates from Bernstein analysts. Applied Materials, Tokyo Electron, Lam Research and Samsung spokespeople declined to comment. Representatives for Tesla, SpaceX and xAI did not respond to requests for comment. Musk -- echoing similar concerns in corners of Silicon Valley -- has said the semiconductor industry isn't ramping up fast enough to produce the chips that AI companies will need. Amazon.com Inc., Alphabet Inc. and other hyperscalers expect to spend about $650 billion this year alone to build out data center infrastructure. That's already creating a severe crunch in memory chips, and is beginning to spill over into AI accelerators. Musk in March outlined plans for the massive operation to build cutting-edge semiconductors for artificial intelligence, robotics and space forays. In so doing, he would take on the best chip manufacturer in the world -- TSMC. Such an endeavor will involve hundreds of steps that intersect multiple engineering fields, with collaboration from companies ranging from suppliers of industrial gases to testing equipment. Applied Materials and Tokyo Electron are critical players in the $1 trillion chip market, supplying the equipment that TSMC and its rivals require for complicated processes such as etching and deposition. ASML Holding NV is perhaps the most essential piece of the chip production supply chain: It's the only company that can make extreme ultraviolet lithography machines, essential for any chipmaker that wants to fabricate the most sophisticated semiconductors at scale. It's unclear whether Musk's team has reached out to the Dutch company as well. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Plus Signed UpPlus Sign UpPlus Sign Up By continuing, I agree to the Privacy Policy and Terms of Service. Tesla board member Ira Ehrenpreis accompanied Musk on his visit to Intel's headquarters earlier this month. In addition to the US chipmaker's expertise, Musk has been recruiting people with knowledge of many different facets of chip plant operations, from chip design to power management, construction and procurement. In the manufacturing sphere, offers have been made to engineers at companies including Applied Materials, Samsung and TSMC, the people said. The project seeks to handle the entire chip manufacturing process from photomask production to testing and packaging in-house. Terafab aims to make AI chips for devices such as robotaxis and Optimus humanoid robots. It also seeks to manufacture high-power semiconductors for use in space by SpaceX and xAI. Musk said he expects xAI to use the vast majority of the components. Some question whether Musk will ever be able to build anything like the Terafab project he sketched out in Austin. The billionaire has accomplished what others believed impossible before -- creating a commercially viable rocket business with SpaceX and bringing electric vehicles to the mainstream with Tesla. Yet he may settle for more modest accomplishments in the chip industry, given the extreme costs and complexity. Hamburg-based Berenberg has yet to include Terafab into its financial models for ASML, whose High NA EUV equipment would likely be used in such an endeavor, Tammy Qiu, the bank's head of tech equity research, said on Bloomberg Tech. "The intention is real," but it won't be something happening in a significant way for another two years, she said. "We haven't put Terafab in our numbers."

Elon Musk Tells TSMC's CEO That Terafab Wouldn't Exist if the Foundry Could Keep Up With His Chip Demand

Elon Musk confirms that SpaceX & Tesla will always remain a major customer of TSMC, but the Taiwanese chipmaker alone couldn't fulfill its demand, which is why they started the Terafab project with Intel. Terafab Is Essential To Elon's Ambitious "In-House" Chipmaking Goals, But Says That SpaceX & Tesla Will Remain A Customer of TSMC A few days ago, Lip-Bu Tan (CEO of Intel) and Elon Musk announced their partnership on the ground-breaking Terafab project, which will be responsible for producing custom and in-house chips for Tesla, SpaceX, xAI, and other ventures. The project is expected to begin its first trial run in 2029, producing 3000 wafers per month, which will scale up as the manufacturing process and yields improve. At the same time, Tesla is a major customer of TSMC and Samsung, where its next-gen AI solutions, such as AI5 & AI6, are being made. Elon shared the first pictures of the AI5 chip, freshly taped out of Samsung fabs in South Korea. He also confirmed that plans for the Dojo3 supercomputer are underway, but at some point, the rising demand for AI will prompt firms to open up multiple semiconductor fronts rather than relying on one. Even better is to start your own manufacturing setup, which is what Elon is doing with the Terafab project. During the TSMC Q1 FY26 earnings call, chairman and CEO, C.C. Wei, shared some of his thoughts on the Terafab project, stating that Tesla and Intel are their customers, and Intel is a very formidable competitor too. He also said that there are no shortcuts to building a fab. It takes 2-3 years to build and another 1-2 years to ramp up. So TSMC's chairman has shown that he is unmoved by the Terafab project. To this, Elon Musk replied to Wei's recent statement, and clarified that SpaceX & Tesla will always be major customers of TSMC, and not competitors in the normal sense of the word. He also said Tesla's Terafab project is designed to meet their own demand, rather than opening up a new option for fabless chipmakers. It will only address the shortcomings of the industry, which are expected to grow rapidly in the coming years, leading to a highly constrained fab business. Elon did say that the Terafab project wouldn't be needed if TSMC could make the "Staggeringly" large number of chips his companies required. So see this as a little back and forth, though indirectly. TSMC retains its leading position on the global semiconductor stage, and Elon Musk's Tesla, SpaceX, & xAI are equally important customers for the company. Follow Wccftech on Google to get more of our news coverage in your feeds.

Intel To Disclose Full Details of Elon's Ground-Breaking TeraFab Project That Will Reshape The Chipmaking Industry

Latest details suggest that Intel is weeks away from unveiling details on Elon's Terafab chipmaking project, which is set to reshape the industry. Dylan Martin of CRN has shared an interesting scoop related to Elon Musk's Terafab project, which is being built in partnership with Intel. Intel plans to disclose to staff the "scope and nature" of its involvement with Elon Musk's ambitious "Terafab" chip manufacturing project in the "coming weeks," according to a memo its CEO, Lip-Bu Tan, sent last week. Tan sent the memo, which was seen by CRN, to Intel employees last Friday, two days after the semiconductor giant announced its involvement with Musk's companies -- SpaceX, xAI and Tesla -- on Terafab, a potential boon to Intel amid its latest turnaround attempt. via CRN In this matter, Intel's CEO himself, Lip-Bu Tan, has sent out an internal memo to Intel Employees which states plans to disclose the "scope and nature" of the project in the coming weeks. This will obviously be highly anticipated given how ambitious the Terafab project is. Just to put things into perspective, the Terafab project will have two phases; one phase is the construction of fabs dedicated to automotive and robotics chips, while the second phase centers around chip production for AI. Tesla just unveiled its ambitious A15 chip, which it has set out to compete against NVIDIA's Hopper and Blackwell offerings. The company also announced that it is working on the next-gen A16 chip, & also the Dojo3 Supercomputer project. The A15 chip is currently being manufactured at TSMC and Samsung, but it will be Tesla's primary goal to shift production in-house at Terafab when it becomes operational. Meanwhile, the Terafab alliance with Elon marks a major deal for Intel and a means to get back in the limelight. Intel itself has been trying to stir up some buzz with its own Intel Foundry plans, aiming to enlist some major players, such as NVIDIA itself. There have been rumors that future chips from NVIDIA may have some production dedicated to Intel's Fabs, while Terafab is likely going to be limited to Tesla, SpaceX, and xAI chip production, exclusively. In the pilot phase, Terafab will reportedly produce around 3000 wafers per month by 2029, and that will be increased gradually as the project scales up. The Terafab project will be responsible for building high-stakes silicon logic, memory, and packaging capabilities, states CRN. So it will be a major deal as Intel shares further updates on this project.

Musk's staff reaches out to suppliers for Terafab project, Bloomberg News reports

April 15 (Reuters) - Elon Musk's staff have reached out to chip industry suppliers for his Terafab AI chip complex project with SpaceX and Tesla, Bloomberg News reported on Wednesday. The team has approached companies including Applied Materials, Tokyo Electron and Lam Research, and has asked chip manufacturing partner Samsung Electronics Co for support, the report said, citing people familiar with the matter. Staff have sought price quotes and delivery times for an array of chipmaking gear, Bloomberg said, adding that in the past few weeks, they've contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools. The goal is to begin silicon manufacturing by 2029 and then scale up, Bloomberg added. Musk's representatives have asked for speedy price estimates while providing minimal information about the products, and Musk wants to move at "light speed," according to the report. Reuters could not immediately verify the report. Tesla, SpaceX, Applied Materials, Tokyo Electron, Lam Research and Samsung Electronics did not immediately respond to requests for comment. Musk launched Terafab in March, and Intel last week said it would join the project to make processors powering the tech billionaire's robotics and data center ambitions. The project will be built on the Tesla campus in eastern Travis County, Austin, Texas. (Reporting by Chandni Shah in Bengaluru; Editing by Sonia Cheema)