Tesla to spend $3 billion on research chip factory, use intel tech

By Ed Ludlow

 

Tesla Inc. plans to spend roughly $3 billion to build a research chip factory in Texas, according to Chief Executive Officer Elon Musk, an early phase of an effort to establish chip manufacturing at a massive scale.

 

The research facility will be built on the electric-vehicle maker’s existing Giga Texas campus, Musk said Wednesday during the company’s quarterly earnings call. It will be capable of outputting just a few thousand wafers a month but intended to be a testing ground for new technologies and processes.

 

SpaceX, Musk’s rocket company, will lead the charge on the early phases of the broader project, known as Terafab, he said. Intel Corp. has signed on to support the effort, positioning itself as a partner that can contribute its chip design, fabrication and packaging expertise.

 

 

“What we’ve figured out thus far is Tesla’s doing the research fab,” Musk said. “SpaceX is doing the initial part of the large-scale Terafab. And then we’ve got to figure out the rest.” 

 

Terafab is Musk’s ambitious push to break into advanced chip manufacturing, with teams from Tesla, SpaceX and his xAI artificial intelligence business all working on it. 

 

The Terafab goal is to secure enough chips for the needs of Musk’s companies — something that contract manufacturers like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. won’t be capable of doing, the billionaire has said.

 

The proposed $3 billion budget represents about a 10th of what one of the chip industry’s biggest companies would spend to build and equip a state-of-the-art facility. A single machine from a supplier such as ASML Holding NV can cost hundreds of millions of dollars.

 

Historically, some semiconductor manufacturers have built what are called pilot lines. These smaller scale facilities are used to test new designs and techniques to make sure they’re ready for mainstream production. They offer the benefits of a lower-cost way to verify new technology but don’t have the scale to allow their owners to make large numbers of components economically.

 

“Any kind of intercompany thing has to be approved by both the SpaceX and Tesla board of directors,” Musk said. “It’s got to go through a conflict resolution.”

 

On the call, Musk was asked for more details of Intel’s involvement and responded by saying he planned to leverage that company’s most advanced production process — known as 14A — for which Intel is yet to secure any customers. The remarks helped send the chipmaker’s shares up about 3% in late trading Wednesday.

 

Musk didn’t make it clear whether he planned to use Intel’s existing plants or license its production technology for the effort.

 

“We plan to use Intel’s 14A process, which is a state of the art and, in fact, not yet totally complete,” Musk said. “But given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time, it seems like the right move.”