Tesla CEO Elon Musk has announced plans to build a massive factory to produce the company’s own artificial intelligence (AI) chips, as demand for computing power in self-driving cars and robotics continues to surge.
Speaking at Tesla’s annual shareholder meeting, Musk said the company may not be able to meet future chip requirements through its current suppliers, including Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. To fix that, Tesla is considering building what he called a “terafab”, a chip plant far larger than any existing “gigafactory.”
Musk said the proposed facility could handle at least 100,000 wafer starts per month, making it one of the world’s biggest semiconductor fabs. He added that Tesla is open to partnering with Intel for the project, saying it’s “worth having discussions” with the American chipmaker. No agreement has been finalised yet.
The move comes as Tesla develops its next-generation AI chip, known as “AI5,” expected to enter small-scale production in 2026 and mass production in 2027. A more advanced version, “AI6,” could follow in 2028 with double the performance. Musk claimed the new Tesla chip would consume one-third the power of NVIDIA’s flagship Blackwell chip and cost only 10% as much to make.
Industry experts have described Musk’s plan as bold but challenging, since building and running an advanced chip fab requires huge investment and expertise. Still, the idea has excited markets—Intel’s shares rose after Musk mentioned the potential tie-up.
At the same meeting, Tesla shareholders also approved Musk’s 10-year compensation plan, worth nearly $1 trillion, signalling continued investor confidence in the company’s long-term AI and robotics ambitions.
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