Elon Musk claims his companies can make chips better than anyone

Elon Musk has a new target: the semiconductor industry. He said his companies can likely improve chip quality better than anyone else, thanks to equipment they build themselves.

The claim, reported by Bloomberg, arrives as Musk pushes Terafab, a chipmaking effort shared by Tesla and SpaceX. It is designed to cut his reliance on the outside foundries that currently make the chips he needs.

What Terafab is supposed to do

Terafab is planned as a vertically integrated manufacturing campus in Texas. The project’s main goal is high-volume production of AI5 chips. These are specialized chips for AI inference, the work an AI model does when it answers a question or makes a decision.

The ambition is large. Terafab aims to produce 1 terawatt of compute capacity per year. That target describes the total processing power the facility hopes to turn out annually, not the electricity it uses.

The rollout is phased. A pilot chip fabrication facility is under construction near Tesla’s Gigafactory in Texas. Larger operations are planned for Grimes County, also in Texas.

The Nvidia comparison

Musk claims the AI5 chip could deliver performance-per-watt 2-3 times better than Nvidia products. He also claims it could do so for about 10% of their cost.