Musk reveals Tesla's plan to build its own chip factory
What's the story
Elon Musk, CEO of Tesla, has announced the company's intention to build a "TeraFab" chip factory in the United States. The move comes as part of Tesla's strategy to secure a steady supply of chips for its artificial intelligence (AI), autonomous driving, and robotics projects. The funding for this ambitious project could come from internal resources or bank loans.
Supply concerns
Musk emphasizes need for domestic chip production
Musk stressed the importance of domestic chip production, saying existing suppliers like Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, and Micron Technology Inc. can't meet Tesla's needs. He said this move is critical to protect the company from geopolitical risks in the future. "I think people maybe are underweighting some of the geopolitical risks that are going to be a major factor in a few years," the centibillionaire said.
Chip wall
TeraFab: A solution to avoid 'chip wall'
Musk also hinted that Tesla might have to make chips itself due to the limited supply. He warned of a possible "chip wall" if the company doesn't go ahead with building its own fab. "We've got two choices: hit the chip wall or make a fab," he said in a recent podcast with Peter Diamandis, founder of the X Prize Foundation.
Funding uncertainty
TeraFab's construction and funding details remain unclear
The exact location and timeline for the construction of TeraFab are still unknown. Tesla plans to spend over $20 billion in capital expenditure this year on its existing factories. However, how infrastructure projects like a solar cell factory and the chip fab will be funded is yet to be determined. Tesla CFO Vaibhav Taneja said, "We have over $44 billion of cash and investments on the books," hinting at possible internal funding or bank loans for the project.