Elon Musk admitted he has no idea how to make chips during Saturday's X Takeover event in Austin, but predicted his companies would build them better than anyone. According to reports from Business Standard, Musk told customers and investors, 'I have no idea how to make microchips,' adding 'we'll figure it out.' Speaking via livestream, he stated, 'I don't know how to make chips, to be clear. I have no idea how to make chips. But we'll figure it out... I had no idea how to make cars or rockets as well.'
Musk revealed that the Terafab chip plant in Grimes County, Texas will have an output of at least $1 trillion, rivaling the GDP of some of the world's larger economies. As reported by Mother Jones, the factory is planned to build chips for Tesla cars and humanoid robots, and for the newly-merged SpaceX and xAI. The project, which recently broke ground 70 miles northwest of Houston, represents a significant escalation from Musk's previous ambitions. Currently, the design of advanced AI chips is dominated by Nvidia, and their fabrication by Taiwan Semiconductor Manufacturing Company (TSMC).
Musk argued that Tesla's experience designing much of its own production machinery, including through its Tesla Automation Germany unit, could improve chip manufacturing. As reported by Business Standard, he noted that his tours of Intel, Samsung, and TSMC fabs left him impressed, but observed that the machines came mostly from the same vendors with little customization. 'I don't want to be complacent or entitled or anything, but, I think probably we'll figure out how to make chips better than anyone. Honestly. I don't know how long it's going to take us to do that. It might take us quite a few years,' Musk stated. The latest reports confirm that Musk's argument centers on designing highly customized production equipment as a competitive advantage, noting that after touring rival facilities, he had not seen much customized equipment while Tesla and SpaceX have extensive experience building specialized machinery.
The plan already has substantial financial backing through the Terafab chip plant in Grimes County, Texas, built through a joint venture with Intel. As reported by Business Standard, the initial investment exceeds $15 billion and is expected to create about 3,000 jobs. The project will receive a $30 million grant from the Texas Enterprise Fund, a state incentive program. Musk emphasized his companies' intention to run the site themselves, dismissing the idea that TSMC would own and operate the fab. According to TradingView News, Musk wrote: 'No, we will build and run the fab. Let there be ZERO doubt about that.' This represents a major strategic shift for Musk's companies, as Tesla and SpaceX already depend heavily on advanced semiconductors for autonomous-driving systems, AI training, robotics, communications and other compute-intensive applications.
Musk's ambitious projections for the Texas chip plant align with his vision of humanity's cosmic future, where 'we aspire to be a galactic civilization' and 'harness all the energy in a galaxy.' As reported by Mother Jones, Musk recently stated that 'Propagating super intelligence to the stars is a great success condition for a biological bootloader,' suggesting humanity would fulfill its cosmic purpose by building AI under Musk's leadership that could potentially trample us all on its way to colonizing the universe. The project will test whether Tesla and SpaceX's custom equipment approach can compete with the handful of foundries currently led by TSMC in advanced chip production, with execution risk being enormous given the extraordinary precision and engineering expertise required for leading-edge fabrication.
