According to Woofun AI, Elon Musk publicly admitted during a live stream of an X platform event in Austin that he "doesn't know how to make chips," yet asserted that his company would produce chips in a way that surpasses any competitor, establishing a narrative of challenging the high barriers to entry in the semiconductor industry.
Elon Musk criticized traditional foundries like TSMC (TSM.US), Intel (INTC.US), and Samsung for relying on standardized equipment from off-the-shelf suppliers, spending tens of billions of dollars annually without custom design. In contrast, Tesla (TSLA.US) has gained a unique advantage by designing its own production equipment through Tesla Germany’s automation division.
According to Woofun AI, Elon Musk believes this experience can improve chip manufacturing capabilities, but he admitted he "doesn't want to come across as complacent or arrogant," and expects it may take "several years." Traditional chip design takes two years from concept to mass production, while Elon Musk hopes engineers can complete about 10 design projects per year to accelerate technological breakthroughs through rapid iteration.
Elon Musk subsequently posted a job listing inviting world-class chip design or manufacturing engineers to join SpaceX (SPCX.US) or Tesla, emphasizing the appeal of rapidly optimizing designs and customizing equipment. The project has secured funding, with Tesla and SpaceX building the Terafab chip factory in Grimes County, Texas, through a joint venture with Intel, with an initial investment of up to $15 billion. The project is expected to create approximately 3,000 jobs and has received $30 million in funding from the Texas Enterprise Fund. Elon Musk explicitly denied on X the possibility of TSMC owning or operating the factory, insisting that operations be fully controlled by their own team.
The Terafab project aims to test whether expertise from automotive and rocket manufacturing can be applied to semiconductor production. Currently, advanced chip manufacturing is dominated by a few foundries, such as TSMC. Elon Musk estimates this trial could take several years. This marks a critical step for Tesla to move upstream into the core hardware supply chain, following its advancements in electric vehicles and aerospace; its success or failure will directly impact Tesla’s future ability to independently control intelligent hardware.