Tesla Plans 'Gigantic' Chip Fabrication Plant as Musk Eyes AI and Robotics Dominance

Elon Musk says Tesla needs to build 'gigantic chip fab' to meet AI and robotics needs

Tesla CEO Elon Musk attends the Saudi-U.S. Investment Forum, in Riyadh, Saudi Arabia, May 13, 2025. Tesla CEO Elon Musk says the company will likely need to build a "gigantic" semiconductor fabrication plant to keep up with its artificial intelligence and robotics ambitions. "One of the things I'm trying to figure out is -- how do we make enough chips?" Musk said at Tesla's annual shareholders meeting Thursday. Tesla currently relies on contract chipmakers Taiwan Semiconductor Manufacturing Company and Samsung Electronics to produce its chip designs and Musk said he was also considering working with Intel. "But even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough," he said. Tesla would probably need to build a "gigantic" chip fab, which Musk described as a "Tesla terra fab." "I can't see any other way to get to the volume of chips that we're looking for." Microchips are the brains powering almost all modern technologies, from smartphones and cars to robotics. Demand has surged amid the AI boom. Tech giants, including Tesla, have been clamoring for more supply from chipmakers like TSMC -- the world's largest and most advanced chipmaker. According to Musk, Tesla's potential fab's initial capacity could reach 100,000 wafer starts per month and eventually scale up to 1 million. In the semiconductor industry, wafer starts per month is a measure of how many new chips a fab produces each month. For comparison, TSMC says its annual wafer production capacity reached 17 million in 2024, or around 1.42 million wafer starts per month. Musk's statements underscore Tesla's shift into AI and robotics -- industries the CEO sees as the future of the global economy. "With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100. There's not, like, an obvious limit," Musk said at the shareholder meeting.

Elon Musk says Tesla could build a gigantic chip fab and work with Intel to meet demand

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? Fresh from being awarded his $1 trillion pay package by Tesla, Elon Musk has announced that the EV giant will probably have to build "a gigantic chip fab" to ensure its AI and robotic ambitions are fulfilled. Musk also said he was considering working with Intel to help meet chip demand. Speaking at the annual shareholders meeting this week, Musk said, "One of the things I'm trying to figure out is - how do we make enough chips?" "You know, maybe we'll, we'll do something with Intel," he added. "We haven't signed any deal, but it's probably worth having discussions with Intel." Tesla currently relies on TSMC and Samsung as its contract chipmakers for the hardware powering its next-gen full-self-driving systems. The automaker signed a $16.5 billion deal with Samsung earlier this year for its future A16 chip to be produced at the Texas fab. It now seems Intel could be added as another chip-building partner. A deal with Intel would give its foundry business a boost. Reports in August claimed its 18A process has been experiencing low yields and quality issues, but since then we've heard that it could begin manufacturing x86 chips for AMD, and reports suggest it has signed Microsoft as a major client for 18A. Intel's share price jumped 2.2% following Musk's comments, while Tesla's shares were up 4% in after-hours trading. Intel's year-to-date share price Musk said this week that Tesla is finalizing the design of its A15 chip, which will apparently see a 40x improvement compared to the current A14. A small number of A15 units will be produced in 2026, with high-volume production only possible in 2027. A16, meanwhile, is predicted to double the performance metrics of its predecessor and go into volume production in 2028. Musk added that it would be inexpensive, power-efficient, and optimized for Tesla software. He claimed it would probably consume about a third of the power used by Nvidia's Blackwell chip, but cost 10% less to make. "But even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough," Musk warned. As such, Tesla will probably need to build a "gigantic" chip fab, which Musk described as a "Tesla terra fab." "I can't see any other way to get to the volume of chips that we're looking for," he said. The CEO claimed the Tesla fab would have an initial capacity of 100,000 wafer starts per month and eventually scale to 1 million. For comparison, the world's largest contract chipmaker, TSMC, has a capacity of around 1.42 million per month.

Elon Musk says Tesla may need a "gigantic" chip factory for its AI ambitions

Tesla relies on TSMC and Samsung for chips but says even their best-case production won't meet future needs. According to CNBC, Tesla CEO Elon Musk stated the company may need a "gigantic" semiconductor fabrication plant for its artificial intelligence and robotics initiatives. Musk expressed this need at Tesla's annual shareholders meeting on Thursday, noting the challenge in securing sufficient chips. He stated, "One of the things I'm trying to figure out is -- how do we make enough chips?" Tesla currently contracts Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics for chip production. Musk also indicated consideration of a partnership with U.S. chip company Intel. He added, "But even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough." Musk anticipates a "gigantic" chip fab, which he termed a "Tesla terra fab," stating, "I can't see any other way to get to the volume of chips that we're looking for." Demand for microchips, powering various modern technologies from consumer electronics to data centers, has increased significantly due to the AI boom. Tech organizations, including Tesla, seek more supply from chipmakers like TSMC, which is the world's largest and most advanced. Musk indicated Tesla's prospective fab would initially target 100,000 wafer starts per month, with an eventual scale-up to 1 million. Wafer starts per month measure new chip production. In comparison, TSMC reported an annual wafer production capacity of 17 million in 2024, approximately 1.42 million wafer starts per month. Tesla designs custom autonomous driving chips but does not yet manufacture them. The company currently outsources production of its "AI5" chip. Musk detailed this chip will be cheaper, power-efficient, and optimized for Tesla's AI software. Musk also announced that Tesla will commence production of its Cybercab, an autonomous electric vehicle without pedals or a steering wheel, in April. Musk characterized AI and robotics as fundamental to the global economy's future. He noted, "With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100. There's not, like, an obvious limit."

Elon Musk plans Tesla mega AI chip fab, mulls potential Intel partnership

Elon Musk revealed Tesla's potential need to construct a massive chip fabrication plant to meet its AI chip demands, even considering collaboration with Intel. This move supports Tesla's autonomous driving and AI ambitions, as current supplier capacity is deemed insufficient for future production needs. CEO Elon Musk on Thursday said Tesla probably will have to build "a gigantic chip fab" to make artificial intelligence chips and publicly mused the EV maker could work with Intel. Tesla is designing its fifth-generation AI chip to power its autonomous ambitions, and Musk at the company's annual meeting laid out potential manufacturing plans. "You know, maybe we'll, we'll do something with Intel," Musk said to a cheering crowd of Tesla shareholders. "We haven't signed any deal, but it's probably worth having discussions with Intel." Struggling U.S. chipmaker Intel has its own chipmaking factories, but has lagged far behind Nvidia in the AI chip race. The U.S. government recently took a 10% stake in Intel, which needs to find an external customer for its newest manufacturing technology. Intel shares popped 4% in after-hours trading on Musk's remarks. Intel declined to comment. Musk scored an important victory on Thursday as shareholders approved a $1 trillion pay package over the next decade, endorsing his vision of morphing the EV maker into an AI and robotics juggernaut. Musk has teased the AI5 chip before and reiterated that Tesla was also partnering with Taiwan's TSMC and South Korea's Samsung. The AI chips power Tesla's autonomous driving systems, including the Full Self-Driving software. Tesla is currently on its fourth-generation chip. A small number of AI5 units would be produced in 2026, with high volume production only possible in 2027, Musk said in an X post on Tuesday, adding that AI6 will use the same fabs but achieve roughly twice the performance with volume production mid-2028. "Even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough," he said on Thursday. "So I think we may have to do a Tesla terafab. It's like giga but way bigger. I can't see any other way to get to the volume of chips that we're looking for. So I think we're probably going to have to build a gigantic chip fab. It's got to be done," he said. Musk, who often talks about his vision for the company in abstract terms, did not offer details of how such a fab would be built, but he said that it would make at least 100,000 wafer starts per month. A wafer start is the measurement of the output of a semiconductor wafer plant. He did say the chip would be inexpensive, power-efficient and optimized for Tesla's own software. This chip would probably consume about a third of the power used by Nvidia's flagship Blackwell chip, at 10% of the cost to make, Musk said. "I'm super hardcore on chips right now as you may be able to tell," he said. "I have chips on the brain."

NVIDIA CEO Jensen Huang Pushes Back on Elon Musk's 'Bold Plans' to Build a Chip Fab, Saying What TSMC Does Is "Extremely Hard"

NVIDIA's Jensen Huang has responded to Elon's statements about building a chip fab, saying that it's almost impossible to match the work that TSMC does. For those unaware, while speaking to his shareholders, billionaire Elon Musk revealed his intentions to build a gigantic chip facility to support Tesla's ambitions in custom chips, such as the AI5. He intends to have a fab that can generate a whopping one million chips per month over time. These statements did come after Elon managed to receive a $1 trillion pay package approval, so there's no surprise that he gave a rather 'ambitious' talk, but interestingly, NVIDIA's Jensen Huang responded to the idea. While talking in Taiwan, here's what he had to say: Building advanced chip manufacturing is extremely hard. It's not just build the plant, but the engineering, the science and the artistry of doing what TSMC does for a living is extremely hard. There's no surprise in what NVIDIA's CEO has said, claiming that chip fabrication isn't an expertise that can be accomplished overnight, and even entities like Intel Foundry are struggling with it, despite being in the business for several years. The idea from Elon Musk came around the fact that the chip output from TSMC, Samsung, and potentially Intel wouldn't be enough for Tesla's custom chips, and that the automaker is exploring plans to enter the chip business itself, creating a "TeraFab". This venture alone could cost 'hundreds of billions' if not less for Tesla. NVIDIA's CEO Jensen Huang is currently in Taiwan, where he is expected to meet with TSMC's executives to discuss the supply chain situation. TSMC has become an integral part of NVIDIA's AI business, as the Taiwan chip giant powers Team Green's 'AI revolution' and is the sole semiconductor supplier. Not only this, but TSMC is doing business with every major company involved in computing, which shows that rivaling the firm isn't an easy business at all. By the looks of it, Tesla needs massive chip capacity to fuel its vehicles and humanoid robots, which opens up enormous prospects for companies like Samsung and Intel, which are looking to get adoption for their high-end chips. At the same time, Tesla's TeraFab ambition won't be an easy one at all, but Elon is known for achieving things that seem 'impossible' at first.

Elon Musk Declares "Chips on the Brain," Plans "Gigantic" Tesla AI Fab and Mulls Intel Partnership

In a move that would surprise a few in the semiconductor world, Tesla CEO Elon Musk announced plans for a "gigantic chip fab" to build Tesla's own AI chips, all while publicly mulling a new foundry partnership with Intel. Speaking at Tesla's annual shareholder meeting Thursday, Musk, fresh off securing a controversial $1 trillion pay package, laid out an aggressive new vision for Tesla's silicon. He stated that even with existing partners TSMC and Samsung, the supply of AI chips is "still not enough" to meet his ambitions for Full Self-Driving (FSD) and the Optimus humanoid robot. "I think we may have to do a Tesla terafab... it's like giga but way bigger," Musk said. "I can't see any other way to get to the volume of chips that we're looking for." This "terafab," according to Musk, would be a colossal facility with at least 100,000 wafer starts per month. But the most immediate bombshell was his open courting of Intel, a move that sent Intel's stock jumping 4% in after-hours trading. "You know, maybe we'll, we'll do something with Intel," Musk uttered to a cheering crowd. "We haven't signed any deal, but it's probably worth having discussions with Intel." For Intel Foundry Services (IFS), which has struggled to land a high-volume, next-generation anchor client, a potential Tesla deal would mean a monumental victory. If it happens, it would validate their high-stakes, multi-billion-dollar bet on becoming a world-class foundry and would go on to prove that major tech players are now seriously considering them as a primary alternative to TSMC and Samsung. Musk's entire strategy seemingly is to present a clear alternate to NVIDIA's AI dominance. While he praised NVIDIA's hardware, he made it clear that Tesla "cannot be dependent on a single supplier" for the "tens of millions" of AI chips he needs. He then made a typically bold claim, estimating Tesla's custom-designed chip would be "inexpensive, power-efficient" and would "probably consume about a third of the power used by Nvidia's flagship Blackwell chip, at 10% of the cost to make." While these figures are highly ambitious, the message is clear: Musk is done with with being at the mercy of NVIDIA's high-margin, supply-constrained GPU market and is willing to spend billions to build a vertically integrated alternative. "I'm super hardcore on chips right now as you may be able to tell," Musk added. "I have chips on the brain." Musk's announcement certainly doesn't mean he's dropping his existing partners. Instead, he appears to be building a multi-foundry "all of the above" strategy to ensure Tesla's supply chain is invulnerable. This new plan complements recent news, including: By bringing Intel into the fold as a potential partner and planning to build his own "terafab," Musk is all set to pit the world's top three foundries against each other. This creates a hyper-competitive environment that can drive down prices and guarantee Tesla gets the capacity it needs for its FSD and robotics ambitions.

Elon Musk Hints at a Massive Intel-Tesla Foundry Deal, Saying It's Worth "Having Discussions" With Team Blue

It appears that Tesla is seeking to add more chip suppliers, and following its agreements with TSMC and Samsung, the automaker is now interested in Intel's foundry services. When it comes to external customers, Intel Foundry hasn't managed to secure much volume, and while the firm's 18A process has panned out to be a competitive platform, Team Blue still hasn't managed to get the 'market spotlight'. However, according to Elon Musk's discussions surrounding the chip industry, the billionaire teased a potential collaboration with Intel Foundry, claiming that Tesla needs 'gigantic' chip production volume across all its partners. With this, the American automaker will become the first to source semiconductors from Samsung, TSMC, and Intel. Maybe we'll do something with Intel. We haven't signed any deal, but it's probably worth having discussions with Intel. Even when we extrapolate the best case scenario for chip production form our suppliers. it is still not enough. - Elon Musk Given that Tesla does manage to secure a deal with Intel, it would likely revolve around the 18A node for now, considering that the process is IFS's most competitive offering, and more importantly, Tesla is looking for '2nm suppliers' for its next-gen AI6 AI chips. For those unaware, Intel was previously rumored to provide advanced packaging services for Tesla's Dojo supercomputer; however, with the venture's shutdown, rumors of a deal were stalled. Now, we are exploring a collaboration on the semiconductor front, which would be a significantly more attractive deal for Intel. Based on the 'Big Three' chip firms out there, Intel has the most 'advanced chip fab' in the US as of now, and the company's Arizona Fab 52 facility is currently mass-producing the 18A node, which is a direct counterpart to TSMC's N2 and Samsung's SF2. Given that Tesla values 'manufacturing in America', a partnership with Intel becomes more sensible in this case, as it provides the automaker with access to a cutting-edge facility right in the US. However, for now, we are unaware of how a potential Intel-Tesla deal could evolve, since Musk hasn't revealed any specifics.

Intel shares rise as Elon Musk touts potential Tesla chipmaking deal By Investing.com

Investing.com-- Intel shares rose in aftermarket trading on Thursday after Tesla CEO Elon Musk said the electric vehicle maker could enter a deal with the chipmaker for artificial intelligence and robotics processors. Intel Corporation (NASDAQ:INTC) rose 2.2% to $38.06 by 18:29 ET (23:29 GMT). Speaking at a Tesla Inc (NASDAQ:TSLA) shareholder meeting, Musk said Tesla may work with Intel to source chips for its autonomous driving and robotics ambitions. He also raised the possibility of Tesla building its own chip factory, citing an outsized need for chips from Tesla's robotaxi and robotics ambitions. Tesla currently has deals with chipmakers TSMC and Samsung to build its AI series of chips, which are used in its EVs. Musk had said during Tesla's third-quarter that TSMC and Samsung will develop the upcoming AI5 chip at their U.S. facilities, and that the company had no plans to replace Nvidia as its main provider of data center hardware. A deal with Tesla could provide Intel with a much needed shot in the arm, especially as the chipmaker largely lagged its peers in capitalizing on AI-driven demand over the past three years. Musk's comments came after Tesla shareholders overwhelmingly approved a $1 trillion pay package for the CEO.