Elon Musk Mulling Chip Production for His Ventures

Tesla CEO Elon Musk’s recent cryptic tweet has sparked speculation about whether he is planning to build a semiconductor fabrication facility, or fab—a project that can cost tens of billions of dollars.

Musk has previously discussed Tesla’s need for vast quantities of microchips to produce millions of robo-taxis and Optimus humanoid robots. (Photo: Tesla) 

He may also have been referring to a partnership with another company when he posted, “Terafab project launches in 7 days,” Al Root and Janet H. Cho reported for Barron’s Daily.

Musk has previously discussed Tesla’s need for vast quantities of microchips to produce millions of robo-taxis and Optimus humanoid robots.

Manufacturing 100 million robots alone would require around 200 million chips, according to Morgan Stanley analyst Andrew Percoco.

That would be roughly 50 times Tesla’s current demand across its automotive and robo-taxi segments.

Percoco believes Musk may be referring to internal production capacity, though he describes building a Tesla fab as a “Herculean task.”

Based on recent discussions with Tesla, Percoco suggests that any move toward an internal fab would be driven by geopolitical concerns and the needs of Tesla’s Optimus program.

Tesla management has indicated that AI computing power could become a bottleneck within three to four years, requiring urgent action. For comparison, Micron’s Boise memory chip fab broke ground in 2022 and is expected to begin production in 2027.

Percoco estimates Tesla could face costs of $35 billion to $40 billion, with an optimistic production timeline beginning in 2028.