Elon Musk Teases Tesla’s Massive AI Chip Fab and Potential Intel Partnership

Tesla CEO Elon Musk announced that the company may build a “gigantic chip fab” to produce its own artificial intelligence chips, possibly in collaboration with Intel. Speaking at Tesla’s annual shareholder meeting, Musk said the EV maker’s growing demand for AI chips to power its self-driving and robotics ambitions could soon outpace supply from current partners, Taiwan’s TSMC and South Korea’s Samsung.

“You know, maybe we’ll do something with Intel,” Musk said, emphasizing that no deal has been signed yet but that discussions would be worthwhile. Intel shares rose 4% in after-hours trading following his remarks. The struggling U.S. chipmaker, recently backed by a 10% U.S. government stake, has been seeking new clients for its advanced chip manufacturing technology.

Musk revealed that Tesla is developing its fifth-generation AI chip, dubbed “AI5,” designed to enhance the company’s autonomous systems, including Full Self-Driving (FSD). He noted that limited production of AI5 units will begin in 2026, with large-scale manufacturing targeted for 2027. Tesla’s next chip, AI6, will reportedly use the same fabrication process but deliver twice the performance, entering mass production by mid-2028.

Musk described the potential Tesla fab—nicknamed the “terafab”—as far larger than current gigafactories, capable of producing over 100,000 wafer starts per month. He said the chip would be power-efficient, cost-effective, and optimized for Tesla’s in-house AI software—consuming roughly one-third the power of Nvidia’s Blackwell chip at just 10% of the cost.

“I’m super hardcore on chips right now,” Musk said. “Even with the best projections from our suppliers, it’s still not enough. So, we’ll likely have to build a massive chip fab. It’s got to be done.”

This bold move could position Tesla as a major player in the global AI semiconductor race, transforming the EV pioneer into a leader in advanced computing and robotics.