Elon Musk says Tesla needs to build 'gigantic chip fab' to meet AI and robotics needs

Elon Musk, the CEO of Tesla, has revealed that the company is contemplating the construction of an enormous semiconductor fabrication plant to support its ambitions in artificial intelligence and robotics. During Tesla's annual shareholders meeting, Musk expressed his concerns about the company's chip supply, stating, "One of the things I'm trying to figure out is — how do we make enough chips?" Currently, Tesla relies on external partners like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics for chip production. Musk also mentioned potential collaborations with Intel to bolster their capabilities. However, he stated that even optimistic projections from these suppliers fall short of Tesla's growing demands. To address this gap, Musk indicated that Tesla would likely need to invest in a colossal chip manufacturing facility, which he referred to as a "Tesla terra fab." He remarked, "I can't see any other way to get to the volume of chips that we're looking for." Microchips are integral to modern technology, powering everything from smartphones to cars and robotics. The surge in demand for these components has been driven by the rapid advancements in AI technology. Musk highlighted that tech giants, including Tesla, are increasingly vying for more supply from leading chip manufacturers like TSMC. Looking ahead, Musk estimated that the initial capacity of Tesla's prospective fab could start at 100,000 wafer starts per month, with future scalability potentially reaching up to 1 million. In the semiconductor sector, the term 'wafer starts per month' refers to the number of new chips produced monthly by a fabrication plant. For context, TSMC projected its annual wafer production capacity to hit 17 million by 2024, translating to approximately 1.42 million wafer starts monthly. Musk's comments highlight a significant pivot for Tesla as it aligns itself with the future trajectories of AI and robotics, sectors he believes have the potential to exponentially enhance the global economy. "With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100. There's not, like, an obvious limit," he concluded during the meeting.