Elon Musk is talking up a monster chip factory in Austin with the same enthusiasm that he used to claim we would all have an affordable robot in our houses two years ago.
Tesla shares plummeted 3.24 per cent as Musk claimed Tesla and SpaceX will team up on a new “Terafab” to feed his plans for artificial intelligence, robots and human settlements in space.
Terafab is meant to crank out chips Tesla would use in its vehicles and in the Optimus humanoid robots the he is increasingly obsessed with. Musk said it will make space-optimised silicon, as SpaceX lines up a huge number of satellites capable of handling AI computing tasks.
Musk said: “We either build the Terafab or we don’t have the chips. We need the chips, so we’re going to build the Terafab.”
Musk has floated bits of the plan before, including in a January quarterly update to Tesla investors. SpaceX’s role, and the apparent size of the thing, had not been spelt out in public like this.
He did not give a timetable for the project, which is convenient when you are pitching a facility that takes years to bring up to speed. The way Tesla and SpaceX will split the work is unclear, with SpaceX recently merging with Musk’s xAI start-up.
Tesla and plenty of others already design their own semiconductors, then pay a specialist to manufacture them in a chip fab. Taking the fab job in-house is where the pain starts, because physics does not care about vibes.
In July, Tesla and Samsung Electronics signed a deal worth nearly $17bn for advanced chips that could be used in robots, self-driving cars and AI data centres. The Korea-based supplier was meant to handle production, while Tesla kept the brainwork.
Some chip types, including memory semiconductors, are in a supply crunch thanks to the greedy demand from companies trying to win the AI arms race. That shortage is pushing firms towards expensive and risky fixes.
Running a chip fab would be a huge undertaking for Tesla and SpaceX because such sites are expensive and take a long time to mature.
Morgan Stanley analysts said, “Even understanding Elon Musk’s history of doing difficult things, this seems like a Herculean task,” in a recent note about Tesla developing a chip fab. They said the effort would cost well over $20bn over multiple years.
On Saturday, Musk said he was grateful for the work Samsung, Taiwan Semiconductor Manufacturing and others have carried out. He said he wants those contractors to expand as quickly as they can, but claimed they are not ramping output at the pace his companies want.
That gap, he argued, is why Terafab needs to happen, even if it reads like a moonshot with a purchase order attached. He pitched it as a straightforward supply problem with a very expensive answer.
Musk said the facility will be packed with equipment for the intricate lithography required in semiconductor manufacturing, as well as for chip design, testing, and production. He said the aim is a tight feedback loop on site so engineers can tweak processes quickly.
In a social media post on Sunday, Musk said Terafab will run two semiconductor fabrication operations, with each specialising in a specific chip design.
