Facing the explosive demand for FSD and Siasun Robot&Automation, Tesla, Inc. (TSLA.US) builds its own chip "moat." Analysts say this will promote the integration of AI and aerospace industries.

Elon Musk, CEO of Tesla, Inc. (TSLA.US), announced last Sunday that two advanced chip factories will be built in a large industrial park in Austin, Texas. One of the factories will provide computing power support for cars and humanoid Siasun Robot & Automation, while the other will provide chips for AI data centers deployed in space. Prior to this announcement, Musk had announced plans to build an advanced AI chip complex called "Terafab" in Austin the day before. Musk posted on social media, "Technically, Terafab will consist of two wafer factories, each producing only one chip design." Musk had previously announced the construction of one of the largest chip manufacturing plants in history, TeraFab. This super factory named "TeraFab" aims to achieve an annual computing power capacity of over 1 terawatt (1,000 gigawatts), covering logic, storage, and advanced packaging, jointly launched by SpaceX, Tesla, Inc., and xAI. It is reported that TeraFab plans to have an annual capacity of 100 billion to 200 billion AI and storage chips, equivalent to a monthly wafer input volume of about 100,000 pieces, with a total investment estimated at 20 billion dollars. The first batch of chips to be produced will be AI5, planned to be launched in 2027, for use in fully autonomous driving (FSD), humanoid Siasun Robot & Automation Optimus, Cybercab unmanned taxis, and data centers. Musk further revealed on social media that once the factory is completed, approximately 80% of the capacity will be used for the space industry, with the remaining 20% aimed at ground applications. This is "one of the largest semiconductor manufacturing businesses ever planned by a private company," which will "make Tesla, Inc. one of the world's largest semiconductor manufacturers" and eliminate Tesla, Inc.'s reliance on Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, Samsung, or any external suppliers, controlling every layer of the AI stack, from chips to software. This is also one of Tesla, Inc.'s largest capital investments, funded by Tesla, Inc.'s $44 billion cash reserves and supported by Musk's long-term AI vision. Musk said, "We are very grateful to the existing supply chain, thank you to companies like Samsung, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, we hope they can expand quickly, and we will buy all their chips. I have told them these words, they can accept the expansion rate has a limit, but this speed is far lower than our expectations, so we need to build Terafab." It is worth mentioning that Musk first mentioned the idea of building a chip factory at Tesla, Inc.'s annual shareholders meeting in November 2025. He stated that to support the continuous iteration of Tesla, Inc.'s fully autonomous driving (FSD) software and the large-scale deployment of Optimus Siasun Robot & Automation, Tesla, Inc.'s demand for chips will reach 100 billion to 200 billion per year. Even if global wafer foundries expand production according to the most optimistic forecasts, their capacity will not meet Tesla, Inc.'s explosive demand for AI chips in the future, so building a large wafer factory is "imperative." Musk pointed out during a demonstration at a facility in Austin last Saturday, "Either we build Terafab, or we won't have chips available." However, the construction of the Terafab project requires a huge capital threshold. Industry insiders say that building a wafer factory with a 2-nanometer advanced process usually requires an investment of $25 billion to $40 billion and a construction period of 3 to 5 years. This poses a huge financial burden on Tesla, Inc.'s current financial situation. Data shows that Tesla, Inc.'s full-year revenue for 2025 fell by 3% to $94.8 billion, while net profit plummeted by 46% to $3.79 billion. Despite holding over $44 billion in cash and investments, its 2026 capital expenditure budget exceeds $20 billion, which does not fully cover the huge expenses of the Terafab project. Market analysts believe that Tesla, Inc. is likely to need equity financing to support this project. Gartner analysts say that the joint chip-making efforts of Tesla, Inc., SpaceX, and xAI will drive the efficient allocation of computing resources across different scenarios, providing a new paradigm for the integration of AI and aerospace industries. Although facing numerous challenges, the project's implementation will significantly enhance the resilience and diversity of the global chip industry.