Tesla's chip shortage just became everyone's problem. During Thursday's shareholder meeting, Elon Musk dropped a bombshell: even with TSMC and Samsung cranking out Tesla's custom chips, it's not enough. The solution? Build what Musk calls a 'Tesla terra fab' - a gigantic semiconductor plant that could rival the world's largest chipmakers.
Tesla just declared war on the global chip shortage - and it's planning to win by going nuclear. Elon Musk's announcement Thursday that the company needs a "gigantic" semiconductor fabrication plant isn't just about making more chips. It's about fundamentally reshaping how AI companies think about their supply chains.
"One of the things I'm trying to figure out is — how do we make enough chips?" Musk told shareholders during Tesla's annual meeting, according to CNBC's coverage. The question sounds simple, but the implications are staggering.
Right now, Tesla depends on the same chipmakers everyone else is fighting over - Taiwan Semiconductor Manufacturing Company and Samsung Electronics. Musk even mentioned considering Intel for future production. But here's the kicker: "Even when we extrapolate the best-case scenario for chip production from our suppliers, it's still not enough."
The numbers tell the story. Tesla's proposed "terra fab" would start with 100,000 wafer starts per month and eventually scale to 1 million. To put that in perspective, TSMC - the world's largest and most advanced chipmaker - produces about 1.42 million wafer starts monthly across all its facilities. Tesla wants to build a single plant that could theoretically match 70% of TSMC's entire global output.
This isn't just about making more chips - it's about making the right chips. Tesla has been designing custom silicon for autonomous driving for years, and now it's producing its latest "AI5" chip that Musk says is cheaper, more power-efficient, and optimized specifically for Tesla's AI software. When you control the entire stack from chip design to final product, you can optimize in ways that off-the-shelf components simply can't match.
The timing couldn't be more critical. Tesla just announced its Cybercab will start production in April - an autonomous vehicle with no pedals or steering wheel. That's not a concept car; that's a robot taxi that needs to make split-second decisions in traffic. The computational requirements are massive, and Tesla clearly doesn't want to be at the mercy of external suppliers when lives are literally on the line.
