Well, it appears that Elon Musk has 'doubled down' on his ambitions to build a chip supply for Tesla, claiming that suppliers like Samsung & TSMC are taking "too much" time.
Elon Musk Claims Suppliers Are Demanding a "5-Year" Timeline To Achieve Capacity Required, But This Is Too Much
Elon Musk is a personality full of 'goals' that are deemed impossible, and it appears that the billionaire has now set his sights on revamping the chip supply chain to ensure that Tesla gets an edge over all others. Speaking with Baron Capital, Tesla's CEO claims that his firm anticipates a massive chip demand in the future, given that FSD will become much more mainstream. His estimates say that the firm will require a whopping "100 million to 200 billion" AI chips per year, and he straightaway claims that TSMC and Samsung as suppliers cannot keep up with this demand.
The production speed doesn't seem fast enough. When I asked them how long it would take from groundbreaking to completion of a new chip factory, they told me it would take five years to start production. I felt that five years was an endless wait for me.
- Elon Musk
This is the third time Elon has mentioned creating chip facilities to meet Tesla's demands, but this time, he has specifically broken down the supply chain situation. To meet the capacity Tesla requires, chip companies like TSMC and Samsung have given themselves a five-year timeline to obtain the necessary production lines. However, according to Elon Musk, this is an "infinite" wait time, as he claims to need to complete the task within a year or two. To achieve this, Tesla's CEO proposes creating his own chip facilities.
You know, from their standpoint, they’re moving like lightning. I’m just saying that, nonetheless it will be a limiting factor for us. … it might just be that the only way to get to scale at the rate we want to get to scale is to build a really big fab – or be limited in output of Optimus and self-driving cars behind the AI chip supply.
- Elon Musk
It appears that Elon is seeking a fab buildout to ensure Tesla achieves the required capacity to implement self-driving technology in its vehicle fleet, but analysts have expressed skepticism about Tesla's CEO's plans, calling them "simply impossible." Based on what the analyst Dan Nystedt says, Elon would likely need to invest a massive amount of Tesla's CapEX into the fab buildout, and even if he manages to raise the capital required, the plans would be hindered by a lack of talent, as well as a cutting-edge chip IP.
One of the options being proposed is that Elon should invest in companies like TSMC to expand their production capacity, claiming that chip suppliers are 'flexible' in meeting customer requirements. We do know that the Taiwan chip giant has made radical decisions to support its clients, one of which is the shift to producing in the US. The idea of a 'TeraFab' sounds optimistic from a shareholder perspective, but the actual supply chain dynamics make it nearly impossible for Elon to achieve the desired capacity.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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