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Tesla Weighs Building ‘Gigantic’ Chip Fab to Meet AI Demand
November 17, 2025 | I-Connect007 Editorial TeamEstimated reading time: 1 minute
Tesla CEO Elon Musk said the company will probably need to build a “gigantic” semiconductor fabrication plant to support its expanding artificial intelligence and robotics plans, CNBC reported.
“One of the things I’m trying to figure out is — how do we make enough chips?” Musk said at Tesla’s annual shareholders’ meeting on Nov. 6.
Tesla now relies on Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics to produce its chip designs, and Musk has also considered Intel as a potential partner. “But even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” he said at the meeting.
He added that Tesla would probably need to build what he described as a “Tesla terra fab,” noting, “I can’t see any other way to get to the volume of chips that we’re looking for.”
Demand for semiconductors has surged as the AI boom drives competition among tech companies for more supply. According to Musk, a potential Tesla fab would start with a capacity for 100,000 wafer starts per month and scale up to 1 million. By comparison, TSMC produced the equivalent of about 1.42 million wafer starts per month in 2024.
Tesla does not currently manufacture its own microchips but has been designing custom chips for autonomous driving. It is outsourcing production of its new “AI5” chip, which Musk said will be cheaper, more power-efficient, and optimized for Tesla’s AI software.
Musk also said Tesla will begin producing its Cybercab, an autonomous electric vehicle with no pedals or steering wheel, in April 2026.
“With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100. There’s not, like, an obvious limit,” he said.
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