Tesla CEO Elon Musk has revealed that the company may need to build its own massive semiconductor manufacturing plant to meet growing demand for artificial intelligence (AI) chips. Speaking during the automaker’s annual shareholder meeting, Musk said Tesla is designing its fifth-generation AI chip, known as the AI5, which will power its autonomous driving ambitions.
Musk noted that Tesla currently relies on Taiwan’s TSMC and South Korea’s Samsung to produce its chips but added that supplier capacity remains insufficient. “Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” he said. “So I think we may have to do a Tesla terafab. It’s like giga but way bigger.”
The Tesla CEO described the proposed fab as “gigantic,” capable of producing at least 100,000 wafer starts per month. Musk did not share details about its location or construction timeline but insisted that such a facility would be essential to sustain the company’s AI hardware roadmap. He also mulled a potential partnership with chipmaker Intel to ramp up production.
“You know, maybe we’ll do something with Intel,” Musk said during the meeting. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.”
The upcoming AI5 chip will see limited production in 2026, with mass manufacturing targeted for 2027. Musk said its successor, the AI6, is expected to deliver double the performance using the same fabrication facilities by mid-2028. He added that Tesla’s in-house chip would be designed to be power-efficient and cost-effective, consuming roughly a third of the energy used by NVIDIA’s flagship Blackwell chip at just 10% of its production cost.
(Source: Reuters)
