Elon Musk and Intel Launch Terafab to Supply Tesla with Custom AI Chips
Elon Musk has teamed up with Intel on the Terafab semiconductor venture to produce custom AI chips for Tesla, SpaceX and xAI. The push comes as Japan commits $16.3 billion in subsidies to Rapidus for its own 2nm chip program, intensifying global competition for advanced node capacity.
1. Global AI Chip Race Heats Up
Japan has approved ¥631.5 billion in new subsidies, bringing total funding for Rapidus to ¥2.6 trillion ($16.3 billion) by March 2027 to back its 2-nanometer chip development and challenge industry leader TSMC.
2. Musk's Terafab Partnership with Intel
Elon Musk has partnered with Intel on the Terafab project to build semiconductors for Tesla, SpaceX and xAI, marking his bid to secure dedicated AI chip supply outside traditional foundries.
3. Implications for Tesla's Supply Chain
Tesla could benefit from in-house AI chips tailored to its vehicles, potentially reducing costs and supply chain risks, but production timelines and scale-up details remain uncertain.