Chips manufacturing, Musk is "serious", 2026

Elon Musk is accelerating his chip localization strategy and plans to build a complete chip industry chain in the United States, from printed circuit boards (PCB) to fan-out panel level packaging (FOPLP) to wafer manufacturing, in order to gradually reduce reliance on external supply chains. According to media reports on November 16, the plan has entered a substantive implementation stage. The new PCB center in Texas is currently operational and the FOPLP factory has started equipment installation, with limited production expected to start in the third quarter of 2026. According to Wall Street News, Musk expressed his intention to "make chips" at a previous Tesla annual shareholder meeting. In his latest social media post, Musk revealed that his team had completed the design review of the AI5 chip on Saturday and had simultaneously started early research and development work on the AI6 chip. He emphasized that the AI5 is a customized inference chip for Tesla AI software, with power consumption reduced to about 250 watts, which is crucial for Optimus. The performance in specific applications will be superior to any other chip solution on the market. Production facilities have begun deployment Musk's chip industry chain plan includes two core facilities. The PCB center in Texas has begun operations to provide basic support for future production. The FOPLP factory is currently in the equipment installation phase, with limited production expected to begin in the third quarter of 2026. SpaceX is the main driving force behind this strategy. The company plans to integrate satellite chip packaging processes, reduce costs, and achieve full control over starlink components. Before the self-sufficient capacity is built, the company procured RF and power management chips from STMicroelectronics and Quanta, but these external procurements will gradually decrease after internal capacity is increased in 2027. According to media reports, Musk has recruited technical personnel from Intel, TSMC, and Samsung, showing his high regard for the chip business. Wafer fab targets a million piece capacity To fully achieve chip localization, Musk plans to build a large wafer fab with an initial monthly production target of 100,000 pieces and a final target of 1 million pieces. Although the fab may not be able to compete with TSMC in advanced process nodes, it will have production capabilities of 14 nanometers and more advanced processes, sufficient to support the needs of businesses such as Siasun Robot&Automation, autonomous driving, and satellite networks. This capacity planning enables Tesla and SpaceX to avoid geopolitical risks and capacity constraints. Stable chip supply is critical for Tesla's autonomous driving technology and SpaceX's Starlink project. Musk had disagreements with TSMC over capacity priority rights, which was a direct motivation for him to build his own supply chain. By controlling the entire process from design to production, companies under Musk's umbrella can produce according to their own needs and schedule, without being constrained by external suppliers. Autonomous supply chain to meet peak AI demand The strategy of establishing an autonomous supply chain aligns with Musk's goal of dealing with the future surge in AI demand. With the expansion of artificial intelligence applications, chip demand is expected to continue to rise, and relying on external suppliers may face delivery bottlenecks during peak demand periods. Musk's approach is essentially to build a self-sufficient system similar to TSMC and Tokyo Electronics, but on a smaller scale and specifically tailored to serve his own enterprises. This vertical integration model provides greater flexibility and security in key supply chain links. Starting from the second half of 2026, companies under Musk's umbrella will gradually withdraw production orders from partners and shift towards internal manufacturing. This transition will directly impact the order volume of existing suppliers and also marks the acceleration of the trend of tech giants towards chip localization. This article is reprinted from "Wall Street View", author: Li Jia; GMTEight Editor: Yan Wencai.