Elon Musk explains why Terafab must be built and gives an update on the Tesla and SpaceX R&D chip fab in Austin:

“For some reason, at some point, chips may not continue coming here from Taiwan. That would really make things difficult if we didn’t have any chips. That’s an important reason to have Terafab. There needs to be certainty of future supply of chips, even if things become challenging geopolitically.”

“Long term, there’s a scaling challenge. If you want to really scale AI, both at the servers and for edge compute, humanoid robotics and cars, you kind of run out of capacity with the existing fabs. All the fabs are running at max capacity. It’s either build Terafab or fail to scale. Those are the two options.”

“There’s an R&D fab that we’re building in Austin. That’s a collaboration between Tesla and SpaceX. We have all the equipment on order. I think we’ll probably be able to make something useful by the end of next year. It really is crawl, walk, run. The first step is, can we make anything? Then make useful chips at scale. And then run would be, now let’s make them at massive scale.”