Wedoany.com Report-Nov. 7, Tesla CEO Elon Musk said on Thursday that the company may need to construct “a gigantic chip fab” to produce artificial intelligence chips and mentioned that Tesla could collaborate with Intel. Speaking at Tesla’s annual meeting, Musk revealed that the company is developing its fifth-generation AI chip to advance its autonomous driving and robotics ambitions.

Computer motherboard and Intel chip appear in this illustration created on August 25, 2025.

“You know, maybe we’ll do something with Intel,” Musk told a cheering audience of Tesla shareholders. “We haven’t signed any deal, but it’s probably worth having discussions with Intel.” His remarks prompted a 4% rise in Intel’s shares during after-hours trading. Intel, which has its own chip manufacturing facilities, declined to comment. The U.S. government recently acquired a 10% stake in Intel as the company seeks external clients for its latest chipmaking technologies.

Musk’s comments came alongside a major win at the meeting, where shareholders approved his $1 trillion pay package over the next decade, signaling continued support for his plan to transform Tesla from an electric vehicle producer into a leading AI and robotics enterprise.

Tesla’s AI chips, currently in their fourth generation, power its autonomous driving systems, including the Full Self-Driving software. Musk noted that Tesla is also collaborating with Taiwan’s TSMC and South Korea’s Samsung on chip production. He said a small number of fifth-generation AI5 chips would be produced in 2026, with large-scale manufacturing expected in 2027. The subsequent AI6 chip generation will use the same fabrication facilities, offering roughly double the performance, with high-volume output anticipated by mid-2028.

“Even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” Musk said. “So I think we may have to do a Tesla terafab. It’s like giga but way bigger. I can’t see any other way to get to the volume of chips that we’re looking for. So I think we’re probably going to have to build a gigantic chip fab. It’s got to be done.”

Musk did not specify the location or detailed construction plans for such a facility but mentioned that it would be capable of producing at least 100,000 wafer starts per month, a common metric for semiconductor output. He added that Tesla’s AI5 chip would be designed to be power-efficient and cost-effective, using about one-third of the power required by Nvidia’s top-tier Blackwell chip while costing only around 10% as much to manufacture.

“I’m super hardcore on chips right now as you may be able to tell,” Musk said. “I have chips on the brain.”

The project underscores Tesla’s growing focus on developing in-house semiconductor capabilities as it aims to strengthen control over its supply chain and enhance performance in AI-driven applications across its vehicles and robotics platforms.