Elon Musk wants to build "Tesla terra fab" for AI as TSMC and Samsung just aren't enough

Elon Musk has announced at the annual Tesla shareholder meeting that the company needs to construct a large semiconductor plant to secure enough chips to meet his AI and robotics ambitions. He said that current contract chipmakers like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics, cannot meet the volume of chips Tesla needs.

Even when extrapolating the best-case production scenarios, Musk says that TSMC’s and Samsung Electronics’ production won’t be enough for the company and wants to produce them at Tesla instead. Notably, he said that Tesla was considering working with Intel which has been going through a rough patch in recent years - if this goes ahead, it could help the firm a lot.

The Tesla "terra fab," as Musk has dubbed it, could have an initial capacity of 100,000 wafer starts per month, eventually scaling up to 1 million wafer starts per month. For comparison, TSMC had around 1.42 million wafer starts per month in 2024. With these additional chips, Tesla hopes to meet its AI and robotics commitments with robots like Optimus.

He said that with AI and robotics, it will be possible to increase the global economy “by a factor of 10, or maybe 100.” With that said, it looks like production will need to be ramped up first before the robots can add to the world economy.

At the same meeting, Musk won a vote over his pay. In the new plan, Musk has the opportunity to earn $1 trillion if he meets certain targets. Milestones have been set so that if he reaches them then he gets paid a portion of the money. Notably though, there are covered events in the plan which give him more shares even when milestones aren’t hit. Some of these include natural disasters, wars, pandemics, or changes to the law/regulations.

If the plan to build the factory goes ahead, the next thing we should hear about is where it will be built. This will give the chosen local economy a boost with building jobs and jobs that are required for operating the factory.

Once built, it’s expected that the factory will be used for the Tesla AI5 and AI6 chips, which Musk has said will "crush" the competition.

Source: CNBC