Tesla, Inc. (TSLA.US) "chip-making" is really here! Musk officially announced: Terafab project will start in 7 days

On Saturday local time, Tesla, Inc. CEO Elon Musk posted on X that the company's Terafab project to manufacture artificial intelligence (AI) chips will launch in seven days. Musk did not disclose specific details, but he and his team may soon explain to the outside world how the chip factory will be established. This will mark another expansion for Tesla, Inc. beyond its core electric vehicle business, and also signifies the beginning of a substantial and costly engineering project. Currently, most advanced chip manufacturing in the world is handled by a few foundries such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Samsung, Intel Corporation. Tesla, Inc. both purchases chips from companies like NVIDIA Corporation and designs chips internally. The company has signed manufacturing agreements with foundries like Samsung and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR. Currently, Tesla, Inc. is designing its fifth generation AI chip (AI5) to advance its vision of autonomous driving. According to official information from Tesla, Inc., this chip, expected to be mass-produced in 2027, is projected to achieve 50 times the performance of the existing AI4 chip. The memory capacity of AI5 is 9 times that of AI4, and the raw computational capability is 10 times that of AI4, and it will be used in various scenarios from electric vehicles to Siasun Robot&Automation, AI training, and data centers. The Tesla, Inc. AI6 chip is currently in the early stage of development. Musk has stated that they will also introduce versions of AI7, AI8, and AI9 chips in the future. The goal cycle for chip design is 9 months. AI6 will primarily be used for OptimusSiasun Robot&Automation and data center computing, while AI7 will focus on space-grade AI calculations. Driven by the artificial intelligence boom, the semiconductor industry is experiencing an "unprecedented prosperity," with such huge demand for chips that companies like Tesla, Inc. are facing supply constraints. Repeated mentions of building chip factories Over the past few months, Musk has repeatedly stated that Tesla, Inc. will build a "giant chip factory" to produce AI chips and address supply bottlenecks. At Tesla, Inc.'s annual shareholder meeting in November last year, Musk first proposed the idea of building "Terafab" - a facility similar to a Gigafactory but specifically for producing AI chips. The goal was to achieve complete vertical integration. Musk stated at that time that he expected Tesla, Inc. to build a "giant" chip factory to realize its ambition of manufacturing autonomous vehicles and humanoid Siasun Robot&Automation. He said, "I can't see any other way to achieve the chip production we expect." He also mentioned at that time that Tesla, Inc. may collaborate with Intel Corporation. "Do you know, maybe we will have some collaboration with Intel Corporation," Musk told Tesla, Inc. shareholders, "We have not signed any agreements yet, but discussing with Intel Corporation might be worth it." Earlier this year, Musk announced plans to build a 2nm chip factory and challenged the "clean room" standards of the chip manufacturing industry. In an interview, he made a bold statement that he would build a 2nm chip factory that could "smoke cigars and eat burgers." During Tesla, Inc.'s earnings call in January, Musk once again mentioned building a chip factory. He also stated that existing chip suppliers are unable to meet demand. The dream of chip manufacturing meets skepticism According to Musk's previous statements, he desires to achieve an annual production of 100 billion to 200 billion chips. Technically, this would make his factory one of the world's largest chip factories. It is clear that Musk is determined to enter the chip manufacturing field, but some experts have expressed skepticism, calling Musk's ideas "far-fetched." Some have pointed out that the semiconductor manufacturing industry has extremely high barriers, and starting from scratch to build a chip factory is arguably one of the most daunting technological challenges in the world. Some also believe that Musk's idea of not building a clean room is not feasible. There are speculations that one way the Tesla, Inc. TeraFab project may be realized is by reaching licensing agreements with chip manufacturers like Intel Corporation and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and providing the necessary funding to help them establish production lines.