November 11, 2025 /SemiMedia/ — Tesla, Inc. said it is preparing to build a large‐scale wafer fab to secure supply of its next-generation AI chips as its automotive and robotics ambitions grow. CEO Elon Musk told shareholders the company’s in-house AI5 processor will enter limited production in 2026 with full volume in 2027, and current contract foundries may not be able to meet the required output.

To address the gap, Musk floated construction of what he described as a “terafab” — a manufacturing facility capable of roughly 100,000 wafer starts per month at launch, scaling toward 1 million wafer starts per month over time.

While Tesla already works with Taiwan Semiconductor Manufacturing Company and Samsung Electronics on the AI5 and subsequent chips, the company is also in early discussions with Intel Corporation for possible co-operation, although no agreement is yet signed.

Musk said the custom chips would be optimized for Tesla’s software stack and systems, aiming for roughly one-third the power consumption of competing flagship devices and about one-tenth the cost to manufacture.

For the semiconductor industry, Tesla’s move underlines growing convergence between automotive systems and advanced chip platforms, and suggests potential shifts in foundry demand as vertically integrated device makers aim to control more of the supply chain.