Tesla Plans to Build Its Own Chip Manufacturing Plant to Reduce Supply Chain Dependence
Tesla CEO Elon Musk announced plans to build the company's own semiconductor fabrication plant to reduce dependency on the global chip supply chain and support AI and robotics ambitions. NVIDIA CEO Jensen Huang has called the massive project 'nearly impossible,' highlighting the extreme complexity and capital intensity of semiconductor manufacturing.
Tesla's Semiconductor Play: A Major Move Toward Independence
Electric vehicle giant Tesla is charting a radical solution to combat uncertainties and bottlenecks in the global chip supply chain. At the annual shareholder meeting, CEO Elon Musk announced Tesla's plan to build its own semiconductor fabrication plant to feed its expanding product portfolio, from cars to AI supercomputers and the humanoid robot Optimus. This move is interpreted as a concrete indicator of Tesla's goal to increase control over strategic components and minimize supply dependency, as it transitions beyond an automotive company into a broader technology firm.
Musk's Ambitious Goal and NVIDIA CEO's Sharp Rebuttal
Elon Musk's ambitious plan has been met with both excitement and skepticism in the tech world. Musk emphasized that his leadership goals in AI and robotics depend on a reliable and abundant supply of advanced, custom-tailored chips. However, Jensen Huang, CEO of NVIDIA, the dominant player in the graphics processing unit (GPU) market, offered a contrasting view. In his remarks on the subject, Huang labeled Tesla's project to build its own massive chip fab as "nearly impossible," drawing attention to the immense complexity, capital intensity, and specialized expertise required for semiconductor manufacturing.
Huang's assessment reflects industry realities. Building a semiconductor fabrication plant (fab) requires tens of billions of dollars in investment, years of construction and qualification processes, and a highly specialized workforce. Currently, the chips Tesla uses in its vehicles and AI projects are manufactured by foundry giants like TSMC (Taiwan Semiconductor Manufacturing Company) and Samsung. For context, considering that industry leader TSMC's annual production capacity as of 2024 is around 17 million wafers (approximately 1.42 million monthly), Tesla's entry into this arena represents a monumental challenge. The announcement has also sparked speculation about potential partnerships, with Intel's name frequently mentioned as a possible collaborator given its own foundry ambitions and existing manufacturing infrastructure.
