Elon Musk announced a massive new semiconductor manufacturing initiative, named TeraFab, aimed at achieving chip self-sufficiency for Tesla. The plan marks a decisive move to eliminate dependence on external suppliers and secure the supply chain for Tesla's AI and autonomous driving ambitions.

TeraFab is not a single factory but a full-scale manufacturing cluster designed to produce logic chips, memory, and handle advanced packaging. Its most ambitious component is a state-of-the-art 2nm fab, positioning Tesla at the leading edge of semiconductor manufacturing.

Tesla expects its 2026 capital expenditures to exceed $20 billion, with a significant portion directed toward building TeraFab and its supporting infrastructure. The planned capacity is staggering: an initial target of 100,000 wafers per month, scaling to a long-term goal of 1 million wafers monthly. This would bring its capacity close to that of industry leader TSMC, which produced approximately 14.2 million wafers per month in 2024. Musk cited the immense chip demand from products like the Optimus humanoid robot as a key driver for this vertical integration.

Musk framed the project as a critical response to geopolitical risks and a necessity to support the company's surging needs for advanced chips in AI, autonomous driving, and robotics. Future products, including the next-generation AI5 chip, are expected to be produced in-house.

In typical Musk fashion, he added a provocative twist, humorously suggesting a desire to "eat a cheeseburger and smoke a cigar" in his 2nm fab—a direct challenge to the strict cleanroom protocols that forbid such activities. He claimed to have a solution: completely sealing the silicon wafers from the external environment.

ICgoodFind : Musk's push into semiconductor manufacturing is a pivotal strategic expansion for Tesla. It directly addresses supply chain vulnerabilities and will significantly intensify competition for advanced manufacturing capacity and talent on a global scale.