Tesla and SpaceX to Challenge Chip Industry Giants with Custom Factory Equipment
Key Summary
Tesla CEO Elon Musk claims his companies will build chips better than anyone else, despite having no prior experience in the industry. He credits custom factory equipment and a design-driven approach for the potential success. A joint venture with Intel is investing $15 billion in a new chip plant in Texas, with the goal of testing chip production expertise in cars and rockets.
Background Context
The chip industry is known for being one of the hardest to enter, with Taiwan Semiconductor Manufacturing Co. (TSMC) and its peers spending tens of billions of dollars a year refining their processes.
Elon Musk's Claims
Musk admitted to having no idea how to make chips, but predicted his companies would build them better than anyone. He credited custom factory equipment and a design-driven approach for the potential success. Musk said his tours of Intel, Samsung, and TSMC fabs left him impressed, but noticed the machines came mostly from the same vendors with little customization. Tesla works the other way, designing much of its own production machinery.
The Plan
Musk wants his engineers to work on roughly 10 chip designs a year, with the goal of speed being the real target. He accepted that some attempts would fail, but more iterations would let teams test ideas sooner and advance faster. A day later, Musk turned the pitch into a job ad, inviting world-class chip design or production engineers to join SpaceX or Tesla.
The Investment
The plan already has money behind it, with Tesla and SpaceX building the Terafab chip plant in Grimes County, Texas, through a joint venture with Intel. The initial investment tops $15 billion, with the project expected to create about 3,000 jobs and receive a $30 million grant from the Texas Enterprise Fund.