Elon Musk Signals Tesla May Build “Gigantic” Chip Fab to Meet AI and Robotics Demand
Elon Musk hints Tesla may build a massive chip plant to meet AI and robotics needs.
Tesla CEO Elon Musk has indicated that the company may need to build its own enormous semiconductor fabrication facility—dubbed a “Tesla terafab”—to meet the soaring demand for custom AI chips powering its autonomous driving and robotics ambitions. Speaking at Tesla’s 2025 annual shareholder meeting, Musk emphasized that even under the best supply scenarios from existing foundries like Samsung and TSMC, the volume needed for Tesla’s self-driving and Optimus robotics programs would fall short.
Currently, Tesla is developing its fifth-generation AI chip, AI5, slated for high-volume production around 2027 via partnerships with Samsung and TSMC. The company already has plans for future generations AI6 and AI7. Musk also mentioned ongoing discussions with Intel as a potential foundry partner to supplement chip production capacity. However, he remains clear that building a proprietary massive chip fab may be the only viable option to meet Tesla’s aggressive growth and innovation targets.
Tesla’s proposed chip plant would start with a capacity of approximately 100,000 wafer starts per month and scale up to 1 million wafer starts over time. To put this into perspective, the world’s largest chip maker TSMC currently produces around 1.42 million wafer starts monthly globally, highlighting the ambitious scale Musk envisions for Tesla’s facility.
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This potential expansion into chip manufacturing underscores Tesla’s strategic focus on vertical integration, securing critical supply chains, and pushing advancements in AI hardware to power its evolving technologies from electric vehicles to humanoid robots. Though details such as location and timeline remain undecided, Musk’s announcement signals a major step forward in reshaping Tesla’s role in the semiconductor landscape.
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