Elon Musk says Tesla needs a ‘giant chip factory’ for AI and robotics

tesla CEO Elon Musk said the company would need to build a “giant” semiconductor manufacturing factory to maintain its artificial intelligence and robotics ambitions.

“One of the things I’m trying to figure out is how do we make enough chips,” Musk said Thursday at Tesla’s annual shareholder meeting.

Tesla currently relies on contract chip makers Taiwan semiconductor manufacturing company The company and Samsung Electronics will produce the chip design, and Musk said he is also considering working with Intel.

“But even estimating the best-case scenario for chip production from suppliers is still not enough,” he said.

Tesla will likely need to build a “giant” chip factory, which Musk described as “Tesla’s TerraFab.” “I don’t see any other way to achieve the amount of tips we’re looking for.”

Microchips are the brains that power nearly all modern technology, from smartphones and cars to robotics. Demand is rapidly increasing amid the AI ​​boom.

Tech giants including Tesla are seeking more supply from chipmakers like TSMC, the world’s largest and most advanced chipmaker.

Tesla’s potential fab’s initial capacity could start at 100,000 wafers per month and eventually scale to 1 million, Musk said. In the semiconductor industry, wafer starts per month refers to how many new chips a factory produces each month.

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

Musk’s comments underscore Tesla’s shift toward AI and robotics, industries the CEO sees as the future of the global economy.

“With AI and robotics, we can actually grow the global economy 10 times, maybe 100 times. There are no obvious limits,” Musk said at the shareholders’ meeting.