The Chip Crunch
During his annual shareholder meeting on November 7, 2025, Elon Musk declared that chip supply was caused to slow down the growth of his company. Even when Tesla hits maxed out orders with giants such as TSMC and Samsung, it is not able to obtain sufficient silicon to make its electric vehicles, Cybercab robotaxis, and Optimus humanoid robots.
Enter Tesla Terra Fab
Musk’s solution? Establish his own gigantic chip fabrication plant- dubbed Tesla Terra fab. The initial plant would be aimed at producing 100,000 wafer starts in a month which would be 5x more than the first plant of TSMC in Arizona. However, that is not the end: Musk is planning a mega-complex of 10 of such plants, which will push the overall production to one million wafers per month.
Why So Big?
Depending on design, each wafer has the potential to produce dozens and hundreds of chips. It is this scale that would power the next-gen AI5 processor by Tesla, which Musk claims is just as powerful as the Nvidia Blackwell GPU but only consumes one-third the power. Intelligent Autonomous driving and Optimus will be powered by the chips.
The Challenges
Timeframe: Years to build and test.
Talent: Fighting over the availability of rare semiconductor engineers.
Price: Probably $100 billion+ of the entire complex.
Memory & Packaging: Tesla should learn how to master the whole supply chain.
Musk did not provide a definite starting date but mentioned that they were continuing negotiations with Intel to assist them in the near future.
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News Source: Pcmag.com
