In a bold move to secure its semiconductor future, Tesla is considering building a massive chip fabrication facility—dubbed the “Tera Fab”—to meet the skyrocketing demand for AI processors and custom silicon across its product lines.
At Tesla’s recent annual shareholder meeting in Austin, Texas, CEO Elon Musk revealed that the company’s chip needs are outpacing what current suppliers like TSMC and Samsung can deliver. With the rollout of Tesla’s AI5 chip and the upcoming AI6, Musk emphasized that existing foundries may not be able to meet Tesla’s scale and performance requirements.
To address this, Musk floated the idea of building a “Tera Fab” capable of producing up to 1 million wafer starts per month, a scale that would rival some of the world’s largest semiconductor fabs. The facility would initially start at 100,000 wafers per month and scale up as neededInvezz.
Tesla’s move signals a significant shift toward vertical integration in semiconductor manufacturing, echoing its approach in battery production and vehicle assembly. By controlling chip production, Tesla could:
- Reduce dependency on external foundries
- Optimize chips for its AI and robotics platforms
- Accelerate innovation cycles for autonomous driving and Dojo supercomputing
Musk also hinted at potential collaborations with Intel, suggesting Tesla might not go it alone in this capital-intensive venture.
Building a fab of this magnitude is no small feat. Industry experts caution that semiconductor fabrication is among the most complex and expensive undertakings in tech, requiring billions in investment, years of development, and a highly specialized workforce. Nvidia CEO Jensen Huang has previously warned that such efforts are “extremely hard” and fraught with execution risk.
Still, Musk’s track record of defying industry norms—whether in EVs, rockets, or AI—makes the Tera Fab vision one to watch closely.ing.ncy and performance.ute capabilities.
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