Musk Says Tesla, SpaceX Could Build AI Chips Better Than Rivals

Elon Musk says Tesla and SpaceX could improve artificial-intelligence chip development by placing design, fabrication, testing and advanced packaging in one Terafab facility serving vehicles, robots and orbital computing.

Terafab is designed to combine logic, memory and advanced packaging under one roof. Its planned capacity is listed as “1 TW/Year,” without explaining whether the figure refers to manufacturing output, computing capacity or another measure.

“I can’t emphasize enough the importance of being able to make a chip, test it, and then change the design, do another one, and have that in a single building,” Musk said.

Musk also said the integrated process could make chip improvements “an order of magnitude better than anything else in the world.” His projections include claims that Tesla’s AI5 chip could deliver two to three times Nvidia’s performance per watt while costing about 10% as much as Nvidia products. Those performance and cost targets have not been confirmed.

Tesla planned AI5 production for 2027 and AI6 production for 2028, with a targeted 50-times performance improvement for AI5 compared with AI4. The company identifies AI5 and AI6 as custom inference chips, while Terafab presents AI5, AI6 and D3 as separate chip families.

The project would extend Tesla’s custom artificial-intelligence hardware effort into semiconductor manufacturing. It is intended to support Tesla’s autonomous-driving systems, Optimus robots and SpaceX’s space-based computing needs.

Intel is a technology partner for Terafab’s 14A process. Taiwan Semiconductor Manufacturing Co. (TSMC) could lease part of the planned site but would not operate the facility, Musk said Oct. 7 at 4:40 a.m. ET (8:40 a.m. UTC).

The statement narrowed TSMC’s previously discussed possible role from operating the facility to potentially leasing part of the site. Earlier coverage of Intel’s involvement and the changing TSMC discussions outlined the partnership questions surrounding Terafab.

“We either build the TeraFab, or we don’t have the chips, and we need the chips, so we’re going to build the TeraFab,” Musk said.

Terafab’s final cost, production start date, manufacturing yield, commercial availability and performance against Nvidia products have not been confirmed.