Tesla CEO Elon Musk said the company will likely need to construct a “gigantic” semiconductor fabrication plant to meet soaring demand for chips that will drive its artificial intelligence and robotics programs. Speaking at Tesla’s annual shareholder meeting Thursday, Musk said the company’s current suppliers cannot keep pace with its long-term ambitions.
“One of the things I’m trying to figure out is how do we make enough chips?” Musk told investors. Tesla currently depends on Taiwan Semiconductor Manufacturing Company and Samsung Electronics for its custom chip designs, and Musk noted he is also considering working with Intel.
“But even when we extrapolate the best-case scenario from our suppliers, it’s still not enough,” he said. Musk added that Tesla would “probably” need to build a massive chip plant, which he dubbed a “Tesla terra fab,” to reach the output needed for its future technologies.
Demand for semiconductors has surged amid the global AI race, with tech giants competing for limited capacity at advanced manufacturers like TSMC, the world leader in cutting-edge chips. Musk said Tesla’s proposed plant could start with an output of 100,000 wafer starts per month and eventually scale to 1 million. TSMC currently produces about 1.42 million wafer starts per month, based on its 2024 figures.
Although Tesla does not fabricate its own chips today, the company has designed its autonomous driving processors in-house for years. Production of its newest “AI5” chip is outsourced, but Musk said the latest model will be cheaper, more energy efficient and calibrated specifically for Tesla’s AI software.
Musk also confirmed that Tesla will begin manufacturing its pedal-less, steering-wheel-free Cybercab robotaxi in April, a vehicle he says reflects the company’s evolution into an AI and robotics powerhouse.
“With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100,” Musk said. “There’s not an obvious limit.”
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