Chip manufacturing, Musk is "serious," 2026
Musk is accelerating the construction of a complete autonomous industrial chain in the United States, from chip design, packaging to manufacturing. The PCB center in Texas has already started production, and the FOPLP factory plans to achieve mass production by 2026; the research and development of the next-generation AI chips is progressing simultaneously. Ultimately, a wafer factory with a monthly production capacity of one million pieces will be established, focusing on applicable processes such as 14 nanometers. This strategy aims to eliminate external dependence, meet the demand for AI computing power, and avoid geopolitical risks, with a significant reduction in external orders expected before 2027
Elon Musk is accelerating his chip localization strategy, planning to create a complete chip industry chain in the United States, from printed circuit boards (PCB), fan-out panel-level packaging (FOPLP) to wafer manufacturing, in order to gradually reduce reliance on external supply chains.
On November 16, according to media reports, the plan has entered a substantial advancement phase. The new PCB center located in Texas is now operational, and the FOPLP factory has also begun equipment installation, with small-scale mass production expected to commence in the third quarter of 2026. According to Wallstreetcn, Musk had previously expressed his intention to "make chips" at Tesla's annual shareholder meeting.
In his latest social media update, Musk revealed that his team completed the design review of the AI5 chip on Saturday and has simultaneously initiated early research and development work on the AI6 chip. He emphasized that the AI5 is a custom inference chip designed specifically for Tesla's AI software, with power consumption reduced to around 250 watts, which is crucial for Optimus. In specific application scenarios, its performance will be comprehensively superior to any other chip solutions on the market.
Production Facilities Have Started Deployment
Musk's chip industry chain plan includes two core facilities. The PCB center in Texas has begun operations, providing foundational support for subsequent production. The FOPLP factory is currently in the equipment installation phase, with limited production expected to start in the third quarter of 2026.
SpaceX is the main driving force behind this strategy. The company plans to integrate satellite chip packaging processes to reduce costs and achieve complete control over Starlink components. Before the establishment of autonomous production capacity, the company procured radio frequency and power management chips from STMicroelectronics and Innolux, but these external purchases will gradually decrease after internal capacity is enhanced in 2027.
According to media reports, Musk has recruited technicians from Intel, Taiwan Semiconductor, and Samsung, demonstrating his high regard for the chip business.
Wafer Factory Aims for Million-Piece Capacity
To fully achieve chip localization, Musk plans to build a large wafer factory, with an initial monthly production capacity target of 100,000 pieces, ultimately aiming for 1 million pieces. Although the factory may struggle to compete with Taiwan Semiconductor on advanced process nodes, it will have production capabilities of 14 nanometers and more advanced processes, sufficient to support the needs of robotics, autonomous driving, and satellite networks.
This capacity planning allows Tesla and SpaceX to avoid geopolitical risks and capacity constraints. A stable chip supply is crucial for Tesla's autonomous driving technology and SpaceX's Starlink project Elon Musk previously had disagreements with Taiwan Semiconductor regarding capacity prioritization, which became one of the direct reasons for building his own supply chain. By controlling the entire process from design to production, Musk's companies can produce according to their own needs and timelines, without being constrained by external suppliers.
Independent Supply Chain to Address AI Demand Surge
The strategy of establishing an independent supply chain aligns with Musk's goal of addressing the anticipated surge in AI demand in the future. As artificial intelligence applications expand, chip demand is expected to continue rising, and reliance on external suppliers may face delivery bottlenecks during peak demand periods.
Musk's approach essentially involves building an independent system similar to Taiwan Semiconductor and Tokyo Electron, but scaled and positioned specifically to serve his own companies. This vertical integration model provides greater flexibility and security in critical supply chain segments.
Starting in the second half of 2026, Musk's companies will gradually withdraw production orders from partners and shift to in-house manufacturing. This transition will have a direct impact on the order volume of existing suppliers and also marks an acceleration of the trend towards autonomy in the chip sector among tech giants
