Tesla AI Chip Factory Terafab Launch Soon as Musk Pushes to End Reliance on Others

Tech billionaire Elon Musk has announced that Tesla's long-trailed Terafab semiconductor project, a purpose-built facility to manufacture artificial intelligence chips, will become operational within seven days. The Tesla chief executive made the announcement, moving the project from aspiration to imminent reality after first floating the idea publicly last year, Reuters has reported.

At the time, Musk told shareholders the electric vehicle maker would probably need to construct what he described as a colossal chip fabrication plant to produce the volumes of AI silicon its autonomous driving ambitions demand.

"Even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough," Musk said at Tesla's annual general meeting last year. 

"So I think we may have to do a Tesla terafab. It's like giga but way bigger. I can't see any other way to get to the volume of chips that we're looking for. So I think we're probably going to have to build a gigantic chip fab. It's got to be done," he said.

The Terafab project is bound up with Tesla's development of its fifth-generation AI chip, known as AI5, which is intended to underpin the company's autonomous vehicle systems including its Full Self-Driving software. Musk has previously indicated that Tesla is working with Taiwan's TSMC and South Korea's Samsung as chip supply partners, though he has made clear that external production capacity falls well short of what the company requires.

At last year's AGM, Musk also raised the possibility of collaborating with Intel on chip production. "You know, maybe we'll, we'll do something with Intel," he said, adding: "We haven't signed any deal, but it's probably worth having discussions with Intel."