Elon Musk told the Tesla annual shareholders’ meeting last week that he is thinking about making the company vertically integrated by building and operating its own fabs.

Showing off his dance moves alongside a dancing Optimus humanoid robot, Musk declared: “I’m super hardcore on chips right now as you may be able to tell. I have chips on the brain.

“Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” he said, talking about Tesla’s A15 chip for ADAS and Optimus.

“So I think we may have to do a Tesla terafab. It’s like giga but way bigger,” said Musk, “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.”

A terafab would be capable of running one million wpm.

Jensen Huang, CEO of Nvidia, says Musk’s plan is “virtually impossible.”

“It’s not just about putting up a factory,” said Huang, “it’s about mastering the engineering, the science, and the craftsmanship that TSMC has refined over decades.”

Musk has already hooked up with Samsung to get Samsung’s Taylor chip site into production for Tesla ICs. His agreement with Samsung gives him the right to walk the floor of the Taylor fab to look for efficiencies in the process as he did with the factories of Tesla and Space X.

This would doubtless give him some ideas for planning the terafab.

Musk’s Terafab

Musk said that A15 would be inexpensive, power-efficient and optimised for Tesla’s own software. 

This chip would probably consume about a third of the power used by Nvidia’s flagship Blackwell chip, at 10% of the cost to make, he said.

Judging by the cost of TSMC’s 1.4nm Fab 25 fab complex, a terafab would cost well north of $1tn. However, Musk is into creative funding initiatives such as the $12bn off-balance-sheet financing of xAI’s Colossus datacentre in Memphis, where Tesla’s only proposed financial commitment would be the rent payable for Nvidia’s chips.

Musk said he is also considering getting together with Intel for fab. “You know maybe we’ll do something with Intel,” he told Tesla employees.

Last week Tesla shareholders approved Musk’s trillion dollar pay award.