Tesla may establish a giant chip factory for artificial intelligence.

Tesla's New Chip Production Plans

Elon Musk stated that Tesla needs to establish a large chip factory to produce artificial intelligence (AI) chips. Tesla is designing its fifth-generation AI chip for its autonomous driving goals, and Musk shared potential production plans during the company's annual meeting.

At the meeting, Musk received applause from Tesla shareholders when he said, "Maybe we’ll do something with Intel." "We haven't signed any agreement yet, but we value discussions with Intel.

Moreover, although Intel has fallen behind Nvidia in the AI chip race, it owns its own chip manufacturing facilities. The U.S. government has taken a 10% stake in Intel, and the company needs to find external customers for its latest manufacturing technology. Following Musk's statements, Intel's shares rose by 4% in after-hours trading.

Elon Musk achieved a significant victory by obtaining investor approval for a payment package worth $1 trillion over the next decade. This supports Tesla's vision of becoming a giant in artificial intelligence and robotics technologies.

Musk announced that they are collaborating with TSMC and Samsung regarding the YZ5 chip. These chips support Tesla's autonomous driving systems, particularly the Full Self-Driving software. Tesla is currently working with the fourth-generation chip.

Musk stated that a limited number of YZ5 units would be produced in 2026, with high-volume production expected in 2027. He mentioned that YZ6 would also be produced in the same factories and would offer approximately twice the performance. However, he expressed that the best scenario from current suppliers is still insufficient.

"Therefore, I think we need to build a big chip factory. Much larger than Giga. I don't see another way to reach the chip volume we are looking for," he said. Musk also noted that this factory would need to produce at least 100,000 wafer starts per month. A wafer start is a unit measuring the output of a semiconductor wafer fabrication facility.

Musk emphasized that the chip would be affordable, energy-efficient, and optimized for Tesla's software. He added that this chip would consume about one-third of the energy used by Nvidia's most well-known Blackwell chip and would account for 10% of production costs.

"Right now, I'm focused on chips," Musk said, "So chips are constantly on my mind."