Tesla Considers Building ‘Tera Fab’ to Meet Future Chip Needs
By Nitin Dahad 11.07.2025
An upbeat Elon Musk, with his newly approved trillion-dollar pay package, talked to a very select group of investors at the Tesla annual shareholders meeting yesterday in Austin, Texas, and told the audience he had chips on his brain and planned to build a “Tera fab” that could potentially produce a million wafer starts per month to meet chip demand for Tesla alone.
Musk said that all he could think about was chips at the moment. He also said that with his AI5 chip and the planned AI6 chip, he did not think existing suppliers (TSMC and Samsung) could meet demand. As a result, he would consider some collaboration with Intel and also building Tesla’s own “Tera fab” to meet demand for Tesla’s own products.
“The thing is that we actually have agreed to buy all the chips that are made from the fab. So, it’s basically a money printing machine for TSMC and Samsung. It’s like literally the faster you make the chips, the faster we send them money. But it’s still not going just fast enough,” Musk said during the shareholder meeting.
“So that’s why I think, as far as I can see, the only option is to go build some like very big chip fab. And then you go to solve memory and packaging too. But otherwise, you just tap out at whatever the chip production rate is. And so, I guess, Tera would be—you’d want to say it’s got to be at least 100,000 wafer starts per month size fab. And maybe that would be one of ten in a complex. So, it would ultimately be one million wafer starts per month,” he added.
Optimus driving chip demand
The key driver for demand would be from areas like robotics. Early in the shareholder meeting, Musk danced along with two Optimus humanoid robots at the sides of the stage and enthused about the transformation they would make to humanity, in terms of personalized healthcare, tackling crime and generally growing the world economy by a factor of ten.
Elon Musk believes the opportunity from the company’s Optimus robots will be huge, and said it’s going to be the biggest product of all time by far, bigger than cell phones, “bigger than anything.” (Source: Tesla)
Talking about the opportunity from Optimus, he said, “I think it’s going to be the biggest product of all time by far. So, like, bigger than cell phones, bigger than anything. I guess the way to think about it is that every human on earth is going to want to have their own personal R2-D2 C-3PO. So, who wouldn’t?”
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Musk added that everyone would want an Optimus robot, and that there could be tens of billions of Optimus robots on earth. He said it would launch the fastest production ramp of any product ever, with a one-million-unit production line in Fremont and a 10-million-production line in Austin.
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