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Elon Musk, CEO of Tesla, has as soon as once more revealed plans to construct an in-house chip manufacturing facility.
Throughout Tesla’s earnings convention name on Jan. 28 (native time), Musk claimed that there’s a excessive chance that reminiscence semiconductors and different parts won’t be able to maintain up with demand within the coming years.
“One of many issues I’m attempting to determine is — how can we make sufficient chips?” Musk stated at Tesla’s annual shareholders assembly.
Tesla at the moment oursources the manufacturing of its AI chip to Taiwan Semiconductor Manufacturing Firm (TSMC) and Samsung Electronics. Musk stated he was additionally contemplating working with U.S. chip firm Intel.
“However even after we extrapolate the best-case situation for chip manufacturing from our suppliers, it’s nonetheless not sufficient,” he stated.
He emphasised, “To remove constraints which are more likely to come up within the subsequent 3 to 4 years, we should construct a huge chip fab, Tesla Terafab. It have to be a really large-scale home manufacturing facility that features logic, reminiscence, and packaging.” He added, “I can’t see some other solution to get to the amount of chips that we’re in search of.”
Along with provide shortages, Musk cited geopolitical dangers as a purpose for needing an in-house chip manufacturing manufacturing facility in the USA. He has repeatedly talked about the potential for geopolitical crises escalating inside just a few years. Nonetheless, he didn’t specify what these geopolitical dangers are.
Musk had beforehand first introduced the plan to construct Terafab, an in-house semiconductor manufacturing facility, at a Tesla shareholders’ assembly final November.
He stated that Tesla’s developed synthetic intelligence (AI) know-how is extremely superior by way of reminiscence effectivity, giving it a aggressive benefit, “however three years from now, contemplating geopolitical uncertainty, there’s at all times a threat that the chips we count on won’t arrive.”
He continued, “So I believe we have to safe extra home manufacturing capability within the U.S. in case chip provide is disrupted for any purpose,” explaining, “With out AI chips, Optimus turns into ineffective, just like the ‘Tin Man from The Wizard of Oz’. That is really a matter of survival for Tesla.”
Musk additionally famous {that a} nice variety of corporations are fully complacent about geopolitical dangers, saying, “They appear to be burying their heads within the sand like ostriches, simply hoping that nothing dangerous occurs.” He careworn, “We can be paranoid to make sure we are able to proceed to provide batteries, robots, and AI chips it doesn’t matter what.”
If Tesla establishes its personal chip manufacturing line, it’s projected to change into a complete chip manufacturing fab for reminiscence and AI accelerator chips, as he acknowledged. In that case, Tesla would enter the reminiscence market—at the moment dominated by Samsung Electronics, SK hynix, and Micron—albeit for its personal procurement. A brand new competitor to TSMC would additionally emerge within the chip design and contract manufacturing market. Briefly, Tesla would successfully have its personal semiconductor firm.
Based on Musk, the envisioned potential fab’s preliminary capability would attain 100,000 wafer begins per thirty days and finally scale as much as 1 million. Within the semiconductor trade, wafer begins per thirty days is a measure of what number of new chips a fab produces every month. For comparability, TSMC’s annual wafer manufacturing capability reached round 1.42 million wafer begins per thirty days in 2024.
In the meantime, Musk additionally revealed that he’s making large-scale investments in batteries and the whole battery provide chain, and that Tesla will change into a significant producer within the photo voltaic cell sector.
He additionally introduced plans to discontinue manufacturing of Tesla’s present electrical automobile merchandise, the Mannequin S and Mannequin X, stating, “(We) plan to transform the Mannequin S and X manufacturing house on the (California) Fremont manufacturing facility into an Optimus manufacturing facility, with a long-term aim of manufacturing 1 million Optimus robots per yr.”
Based on Tesla’s This autumn 2025 earnings report launched on this present day, income was $24.9 billion and earnings per share (EPS) was $0.50.
Each income and EPS exceeded Wall Road’s common forecast (income of $24.79 billion, EPS of $0.45) as compiled by monetary info agency LSEG. Nonetheless, in comparison with the identical interval final yr, income and EPS decreased by 3% and 17%, respectively.
Working revenue was $1.4 billion and web earnings (GAAP) was $840 million, down 11% and 61%, respectively, from the identical interval final yr. The working revenue margin was 5.7%, down 0.5 share factors from the identical interval final yr. Working bills elevated by 39% in comparison with a yr in the past.
Final yr’s complete annual income was $94.8 billion, a 3% lower from the earlier yr, with automotive income accounting for $69.5 billion, a ten% lower year-over-year. This marks the primary time in Tesla’s historical past that its annual income has declined. Final yr’s annual web earnings was $3.8 billion, a 46% lower from the earlier yr.
Tesla introduced on Jan. 16 that it had signed an settlement to speculate $2 billion (roughly 2.865 trillion received) in Musk’s synthetic intelligence (AI) startup, xAI. The corporate defined, “Tesla is constructing services that convey AI to the bodily world,” and “This funding (in xAI) and the underlying settlement are supposed to strengthen Tesla’s capabilities to develop and deploy AI services at scale within the bodily world.”
Tesla additionally acknowledged that it’s getting ready manufacturing traces for the Cybercab, a brand new automobile devoted to autonomous robotaxi providers, the Semi electrical truck, and the Megapack 3 vitality storage system, with the aim of beginning mass manufacturing this yr.
In its earnings report, Tesla described the efficiency of its full self-driving (FSD) supervised software program, stating, “We set a file of over 1 million kilometers pushed inside a month of launching the FSD (Supervised) service in Korea.”
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