Inside ‘Terafab’: Musk unveils plan for world’s largest AI chip factory

Elon Musk reportedly announced that Tesla’s massive in-house semiconductor manufacturing facility, known as the “Terafab project” will launch in seven days. This marks a significant shift for Tesla as it transitions from a fabless model to an Integrated Device Manufacturer (IDM).

Tesla CEO said last year that it probably would have to build a gigantic chip fab to make artificial intelligence chips. Tesla is working to design a remarkable fifth-generation AI chip to power its autonomous ambitions, and Musk at the company’s annual meeting last year laid out potential manufacturing plans.

In this connection he said: “You know, maybe we’ll, we’ll do something with Intel.”

“We haven't signed any deal, but it’s probably worth having discussions with Intel,” he had said.

At present, Tesla did not respond to Reuters’ request seeking more details about the project. Musk has teased the AI5 chip before and reiterated that Tesla is also partnering with Taiwan’s TSMC and South Korea’s Samsung. The dynamic combination of AI chips that powers Tesla’s autonomous driving system incorporates the Full Self-Driving software.

Musk furthermore said: “ Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough.”

“So I think we may have to do a Tesla terafab. It’s like a giga but way bigger. I can’t see any other way to increase 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 further added.