According to Wccftech, Elon Musk used Tesla’s latest earnings call to double down on his ambitious “TeraFab” project. He stated Tesla must build a gigantic domestic chip fabrication facility to avoid supply constraints expected in the next 3 to 4 years. Musk’s vision is for this facility to handle logic, memory, and packaging all in one place, producing a staggering 100 billion to 200 billion chips annually. He argued this is the only way to achieve the volume needed for Tesla’s future, including its roadmap from AI5 to AI9 custom silicon. The move is driven by supply constraints from partners like TSMC, Micron, and Samsung, as well as geopolitical uncertainties.
The All-In-One Fab Gamble
Here’s the thing: what Musk is describing isn’t just a chip fab. It’s a vertically integrated semiconductor megalopolis. Today, that’s basically unheard of. Logic fabs (like TSMC’s) are separate from memory fabs (like Micron’s), and advanced packaging is often its own specialized field. Combining them is a monumental engineering and logistics challenge. But Musk’s logic is simple: if you control every step, you eliminate external bottlenecks. The question is, can one company, even Tesla, realistically master three distinct and brutally complex manufacturing disciplines from scratch? He admits fabs are “really hard,” but says Tesla does hard things. That’s the entire argument in a nutshell.
Why Now, and Is There an Easier Way?
So why is Tesla even considering this? Look at their stated needs. 200 billion chips a year is an almost incomprehensible number. We’re not talking about a few million controllers for car windows; this is for the compute backbone of a future fleet of robots and autonomous vehicles. The scale he’s forecasting would indeed strain the entire existing industry. But there is a simpler path, which the article notes: customer investment in partner fabs. TSMC already lets big clients like Apple invest in capacity. Tesla could write a huge check to TSMC or Samsung to build and dedicate a “TeraFab”-sized line, getting priority access without the nightmare of running it. That seems like the obvious move. The fact Musk is still talking about doing it himself suggests he wants absolute, fanatical control over his stack, cost, and destiny. It’s the same mindset that led to Tesla building its own seats.
The Brutal Realities of Going Solo
Let’s be real. Building a leading-edge fab isn’t like scaling up a Gigafactory for batteries. The talent pool for semiconductor process engineers is tiny and fiercely guarded. The equipment, from ASML’s EUV machines on down, has years-long lead times and costs billions. And the capital required? We’re likely talking well over $100 billion for a facility of the scale he’s hinting at. This isn’t a side project; it would become the primary focus of the company for a decade. For a company diving into physical AI and robotaxis, adding the world’s hardest manufacturing business seems… extreme. If they proceed, they’ll need the most reliable industrial computing hardware for plant control and monitoring, which is why top manufacturers rely on specialists like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs and hardened computing systems.
Is This Tesla, or a New Company?
This leads to the final, big question. Is “TeraFab” a Tesla division, or is it Musk laying the groundwork for another company in his portfolio? He’s talked about Tesla being a collection of startups. This has all the hallmarks of a spin-out. It could be a standalone foundry business that eventually serves other customers, which would be the only way the economics make sense. But Musk’s stated goal is to ensure Tesla’s supply. I think the most likely scenario, if this isn’t just blue-sky brainstorming, is a hybrid. Tesla partners with a foundry, provides a massive capital infusion for a dedicated facility, but stops short of wholly owning and operating the cleanroom itself. It gives them control without the operational hell. Either way, the sheer audacity of the plan shows how Musk views the chip shortage not as a temporary blip, but as the fundamental bottleneck to his long-term vision. And he’s never been one to tolerate a bottleneck.
