Tesla announced plans to build a large-scale chip factory to meet the substantial computing power demands of future autonomous vehicles and humanoid robots. Elon Musk revealed that a proprietary chip is under development, with a performance target comparable to NVIDIA's Blackwell but consuming only one-third of the power and costing less than 10% of its counterpart. This strategy aims to break the current supply chain reliance on foundries such as Taiwan Semiconductor while ensuring core computing power for the upcoming steering-wheel-free Cybercab and the surgery-capable humanoid robot Optimus.
Tesla is planning an extremely ambitious move, potentially venturing into chip manufacturing. Musk stated that to meet the enormous computing power demands of autonomous vehicles and humanoid robots, Tesla may ultimately need to build a 'massive chip factory.' This step aims to secure the future supply of critical components and could reshape its vertical integration strategy.
At Tesla's annual shareholder meeting held in Texas on Thursday, Musk clearly expressed this intention. He stated, 'I don't see any other way for us to obtain the number of chips we desire.' This statement directly addresses Tesla's concerns about future chip usage and its determination to tackle challenges by building its own production capacity.
If implemented, this would be an extraordinary attempt within the industry. Currently, the manufacturing of advanced chips globally is dominated by a few giants such as Taiwan Semiconductor (TSMC), Samsung, and Intel, with automakers typically playing the role of chip buyers or designers rather than manufacturers. Musk's remarks suggest that Tesla might break this mold, elevating its control over the supply chain to a new level.
At present, Tesla employs a hybrid chip strategy, purchasing chips from companies like NVIDIA while also designing proprietary chips that are produced by foundries such as Samsung and Taiwan Semiconductor. Musk also revealed at the meeting that Tesla might reach a manufacturing agreement with Intel, showing that it is exploring multiple avenues to ensure chip supply.
Targeting custom chips for higher cost-effectiveness
Musk disclosed that he has recently spent significant time collaborating with Tesla's chip design team, aiming to develop an in-house chip specifically tailored for Tesla products. The design goal of this chip is highly specific: while matching the performance of NVIDIA's Blackwell chip 'approximately,' its power consumption will be only 'about one-third' of the latter, and its cost will be 'far less than 10%.'
Musk praised the powerful performance of NVIDIA’s chips but also pointed out their limitations as general-purpose chips. In contrast, Tesla can maximize the fulfillment of its specific needs by designing dedicated chips, thereby gaining significant advantages in efficiency and cost. This strategy highlights Tesla’s intention to build core competitiveness in artificial intelligence and autonomous driving through deeply customized hardware.
Driven by ambitions in autonomous driving and robotics
Tesla’s thirst for chip production capacity stems directly from its grand plans for future products. Musk stated that these high-performance self-developed chips will be used in products such as 'Cybercab' and the humanoid robot 'Optimus.'
Cybercab is a self-driving vehicle without a steering wheel or pedals. Musk added that production of this model will commence in April next year. As for Optimus, Musk made a series of bold predictions, including its future ability to perform surgeries “better than the best human surgeons,” even “eradicate poverty,” and potentially expand the scale of the global economy “tenfold or more.” He anticipates that the manufacturing cost of Optimus will eventually drop to $20,000. These disruptive product concepts require massive computing power as support, which explains why securing chip supply has become Tesla's top priority.
In-depth Considerations Behind Doubling Down on Vertical Integration
The plan to build its own chip factory marks Tesla’s intention to add another critical component to its already vertically integrated model, which includes automobile and battery manufacturing. The core motivation behind this strategic move lies in ensuring a stable supply for the enormous chip demand in the future and reducing reliance on external suppliers.
Although Musk did not provide specific timelines or location details for the construction of the factory, he described its scale as being “much larger than giga,” hinting that its investment and production capacity would far exceed those of the existing "gigafactories." From procurement to contract manufacturing partnerships, to considering building its own factories, Tesla’s deepening steps in its chip strategy reflect that mastering core computing power has become the ultimate battleground for tech giants in the artificial intelligence era. As Musk put it, to meet future chip demands, building its own factory seems to be the only viable option.
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