As the demand for AI chips rises, Elon Musk hinted that Tesla may build a massive in-house “Tesla terra fab” to secure semiconductor supply for future technologies.
Tesla Chief Executive Elon Musk has suggested that the company may need to construct its own large-scale semiconductor fabrication facility to meet the growing demand for chips used in its artificial intelligence (AI) and robotics projects.
Speaking at Tesla’s annual shareholders’ meeting, Musk said the company faces a shortage of chips despite supply agreements with leading manufacturers Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics.
He also added that Tesla may also explore a partnership with US-based Intel.
Musk said that even under the most optimistic projections from Tesla’s suppliers, chip availability would remain insufficient, adding that the company might eventually need to build what he called a “Tesla terra fab” to reach the required production scale.
The proposed facility could initially have a capacity of approximately 100,000 wafer starts per month, with the capacity expanding over time to one million. By comparison, TSMC’s total capacity in 2024 was roughly 1.42 million wafer starts per month, making Tesla’s plan an ambitious undertaking for a new entrant to chip production.
Microchips are critical components in modern technology, powering everything from smartphones to autonomous vehicles and data centres. The surge in AI applications has further tightened global chip supply, driving companies such as Tesla to seek greater control over production.
Tesla currently designs its own chips for autonomous driving systems but outsources manufacturing. Its latest “AI5” chip, still produced externally, is expected to be cheaper and more energy-efficient than previous versions, tailored for Tesla’s AI workloads.
Musk also announced that production of Tesla’s fully autonomous ‘Cybercab’, a self-driving electric vehicle with no pedals or steering wheel, will begin in April.
