【AI + Chip】Tesla Building Its Own Chips? Musk Announces Launch of AI Chip Megafactory "Terafab"

Tesla CEO Elon Musk announced on Saturday (14th) via social media platform X that in seven days, they will launch the “Terafab” project for manufacturing AI chips.

Although the post did not provide further details, Musk has repeatedly emphasized that existing major chip suppliers will be insufficient to meet the future expansion needs of Tesla’s electric vehicles, Optimus robots, and AI business.

Last year, at Tesla’s shareholder meeting, he stated: “Even if we calculate based on the best capacity our suppliers can provide, it still won’t be enough.”

“So I think we might have to build a Tesla ‘Terafab.’ It’s like a ‘Gigafactory,’ but much larger. I don’t see any other way to achieve the chip output we need. Therefore, I believe we will very likely have to build a massive chip factory, and this is imperative,” he said.

Additionally, Musk has publicly mentioned the possibility of collaborating with Intel (NASDAQ: INTC) multiple times, saying “maybe we’ll do something with Intel,” but also clearly stating “we haven’t signed any agreements,” and negotiations are still in the exploratory stage.

Achieving Vertical Integration in the AI Chip Industry Chain

Market analysts suggest that once Terafab is operational, Tesla will achieve vertical integration from design to manufacturing in the AI chip sector, aligning with its consistent strategy in batteries and vehicle manufacturing.

Although Musk has provided a clear timeline, the substantive details of the Terafab project remain to be clarified. Industry estimates suggest that building a top-tier chip factory could require an investment of between $20 billion and $30 billion; if fully located in the U.S., costs would likely be even higher.

Tesla CFO Vaibhav Taneja stated during the Q1 earnings call that the company is prepared to support large-scale capital expenditure plans through borrowing and other means.