Elon Musk Responds to “Infinite” Delays From TSMC & Samsung by Planning to Build Tesla’s Own Fabs to Meet $200 Billion Annual Chip Demand

Elon Musk has intensified his efforts to establish a robust chip supply for Tesla, asserting that major manufacturers like Samsung and TSMC are taking “too much”time to ramp up production.

Musk Critiques Supplier Timelines, Sees Need for In-House Chip Production

Known for his ambitious goals, Elon Musk is on a mission to overhaul Tesla’s chip supply chain, aiming to secure a competitive advantage in the evolving automotive landscape. In a recent discussion with Baron Capital, Musk highlighted Tesla’s future chip requirements, predicting a staggering demand of “100 million to 200 billion” AI chips annually as Full Self-Driving (FSD) technology becomes widely adopted. He emphasized that current suppliers are ill-equipped to meet this forecasted need succinctly.

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 isn’t the first time Musk has broached the idea of establishing chip manufacturing facilities. However, he has now clearly outlined the hurdles within the supply chain. TSMC and Samsung have indicated a five-year timeline to enhance their production capacity, a duration Musk deems unacceptable. Instead, he is advocating for Tesla to build its own facilities as he aims to accomplish this within one to two years.

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

Musk’s call for the construction of new fabrication plants signifies a crucial step towards ensuring Tesla can deploy self-driving technology at scale. Nevertheless, industry analysts have expressed doubts regarding the feasibility of his ambitious plans, labeling them as “simply impossible.”Analyst Dan Nystedt asserts that Musk would need to allocate a significant portion of Tesla’s capital expenditures for this initiative, and even if the funds are secured, challenges such as workforce shortages and access to advanced chip intellectual property could impede progress.

TSMC’s 3nm Production Capacity To Almost Reach Its Limit By 2026

One potential solution on the table is for Musk to invest in established companies like TSMC to boost their production capabilities. Suppliers, including TSMC, have demonstrated flexibility in accommodating customer needs, exemplified by their recent strategic realignments to enhance U. S.manufacturing capabilities. While the concept of a ‘TeraFab’ may resonate well with shareholders, navigating the complexities of the supply chain presents significant obstacles for Musk to achieve the projected output.

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