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Musk Says Tesla Likely Needs a Gigantic Chip Fab to Meet AI Demand

The CEO sketched a tentative plan involving current foundries with possible Intel discussions.

Overview

  • At Tesla’s shareholder meeting, Elon Musk said capacity from TSMC and Samsung would not meet projected needs, so he is considering an in-house “terafab.”
  • He outlined an initial target of about 100,000 wafer starts per month with potential scaling to roughly 1 million.
  • Tesla’s AI5 is planned for limited output in 2026 with volume production in 2027, with AI6 targeting mid-2028 volume on the same fabs.
  • Musk said talks with Intel would be worth exploring but confirmed no deal; Intel declined to comment as its shares rose about 4% after hours.
  • He claimed Tesla’s chip would use about one-third the power of Nvidia’s Blackwell and cost about 10% to make, and shareholders approved a $1 trillion compensation plan for him.