Elon Musk may expand into another major business: chip manufacturing.

During Tesla’s annual shareholders meeting on Thursday, Musk discussed his vision for building next-generation electric cars and robots, including his driverless Cybercab and the Optimus bot.

However, chip availability and electricity needs are a "limiting factor." Musk's companies are already buying all the available chips from contract semiconductor companies, including TSMC and Samsung, but the chip output still isn’t "going fast enough," he said.

"As far as I can see, the only option is to go build some very big chip fab," he said. "And then you have to solve memory and packaging, too. But otherwise, you just tap out at whatever the chip production rate is."

Musk has dubbed the proposed factory the Tesla Terra Fab. "I can’t see any other way to get to the volume of chips that we’re looking for," he explained. This "gigantic" fab would aim for “at least 100,000 wafer starts per month,” meaning its manufacturing output would be five times TSMC’s first fab in Arizona.

However, Musk noted envisioning not one, but 10 such fabs in a massive complex. “So ultimately, it’d be a million wafer starts per month,” he added. Each completed wafer could then yield dozens or hundreds of chips, depending on the size.

One of the planned chips includes the AI5 processor for new Tesla vehicles, which use “about a third of the power” of an Nvidia Blackwell GPU while offering comparable performance, Musk says.

Building such fabs would take years, require hiring scarce chip engineering talent, and likely require an investment of over $100 billion, if not more. Musk didn't provide a timeline, but in the short term, Musk mentioned holding talks with Intel about using its chip manufacturing.

That $100 billion pales in comparison to the $1 trillion pay package that over 75% of Tesla shareholders approved for Musk this week.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved