Elon Musk says Tesla needs “gigantic chip fab” for its AI and robotics

Tesla’s CEO Elon Musk said the company will likely need to build a “massive” semiconductor manufacturing facility to keep up with its artificial intelligence and robotics goals.

“One of the things I’m trying to figure out is: how do we produce enough chips?” Musk said at Tesla’s annual shareholders meeting on Thursday.

Tesla now relies on contract chipmakers Taiwan Semiconductor Manufacturing Company And Samsung Electronics producing chip designs. Musk also said he is considering working with the US chip company Intel.

“But even if we extract the best-case scenario for chip production from our suppliers, this is still not enough,” he said.

Tesla will likely need to build a “massive” chip factory, which Musk has described as a “Tesla terra factory.” “I don’t see any other way to achieve the chip volume we’re looking for.”

Microchips are the brains that power nearly all modern technologies, from consumer electronics like smartphones to massive data centers, and demand for them is soaring amid the artificial intelligence boom.

Technology giants, including Tesla, are demanding more supplies from chip manufacturers such as TSMC, the world’s largest and most advanced chip manufacturer.

According to Musk, the initial capacity of Tesla’s potential factory will start at 100,000 wafers per month and eventually scale up to 1 million. In the semiconductor industry, monthly wafer start is a measure of how many new chips a factory produces each month.

For comparison, TSMC says The annual wafer production capacity reached 17 million in 2024, or about 1.42 million wafer starts per month.

Although Tesla does not yet produce its own microchips, the company has been designing specialized chips for autonomous driving for several years.

The company is currently outsourcing production of its latest-generation “AI5” chip, which Musk says will be cheaper, energy efficient and optimized for Tesla’s artificial intelligence software.

The CEO also announced Thursday that Tesla will begin producing the Cybercab, an autonomous electric vehicle without pedals or a steering wheel, in April.

Musk’s statements underscore Tesla’s focus on artificial intelligence and robotics, industries the CEO sees as the future of the global economy.

“With artificial intelligence and robotics, you can actually increase the global economy by a factor of 10 or maybe 100. There’s no clear limit,” Musk said at the shareholders meeting.