Key Points:
- Elon Musk’s team is contacting chip suppliers for “Terafab.”
- Project aims for massive-scale, cutting-edge chip production.
- Samsung offered Tesla capacity instead of joining Terafab.
- Intel expresses interest in joining Musk’s chip initiative.
Elon Musk is making initial moves into the highly complex world of cutting-edge chip production with his ambitious “Terafab” project. His teams from Tesla Inc. and SpaceX have begun contacting major chip industry suppliers, including Applied Materials Inc., Tokyo Electron Ltd., and Lam Research Corp., seeking price quotes and delivery times for a wide range of chipmaking equipment.
These representatives have reached out to makers of essential components like photomasks, substrates, etchers, depositors, cleaning devices, and testers. This early outreach suggests Musk is serious about pushing forward with Terafab, despite considerable skepticism from the established semiconductor industry.
The Terafab team also sought support from their chip manufacturing partner, Samsung Electronics Co. However, Samsung reportedly responded by offering to dedicate more capacity for Tesla at its planned factory in Taylor, Texas, rather than directly joining the Terafab initiative.
Musk’s project aims to dramatically reshape the chipmaking landscape, placing him in direct competition with giants like Taiwan Semiconductor Manufacturing Co. and Intel Corp. Notably, Intel has expressed its intention to join the Terafab initiative, with CEO Lip Bu Tan sharing a photo of Musk during a recent visit to Intel’s Santa Clara office.
Musk’s representatives are pushing for extremely fast responses, sometimes asking for price estimates within a single business day, indicating his desire to move at “light speed.” This urgency highlights the rapid pace he expects for the project.
News of these talks positively impacted the stock market. Shares of Tokyo Electron rose by 5.3% in Tokyo, and other chip gear makers like Advantest Corp., Screen Holdings Co., and Disco Corp. also saw their stock prices increase. Applied Materials and Lam Research experienced over 2% gains in pre-market trading.
The Terafab project has an astonishing goal: to supply 1 terawatt of annual computing capacity, a scale that would dwarf current global chip production. While Tesla already designs its own FSD chips for autopilot, Musk’s companies have never actually manufactured semiconductors. He reportedly plans to start with a pilot line in Austin, leveraging Tesla’s existing EV factory and infrastructure.
The chips produced by Terafab would support Musk’s various ventures, including his artificial intelligence business xAI, a line of humanoid robots, and even data centers in space. Many in the semiconductor industry currently view these ambitions with skepticism. The ultimate size and location of the project, whether a single mega-site or multiple facilities beyond Texas, remain unclear.
