Making chips, Musk is "serious"—2026

Musk is accelerating his chip self-sufficiency strategy, planning to build a complete chip industry chain in the United States, covering printed circuit boards (PCB), fan-out panel-level packaging (FOPLP), and wafer fabrication, to gradually reduce dependence on external supply chains.

On November 16, according to media reports, the plan has entered a substantive implementation phase. The new PCB center in Texas is now operational, and equipment installation has begun at the FOPLP factory, which is expected to achieve small-scale mass production 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 AI5 chip design review on Saturday and has started early development of the AI6 chip. He emphasized that the AI5 is a custom inference chip for Tesla's AI software, with power consumption lowered to about 250 watts, which is critical for Optimus. In specific application scenarios, its performance will fully surpass any other chip solution on the market.

Production facilities have begun deployment

Musk’s chip industry chain plan includes two core facilities. The PCB center in Texas has started operations, providing a foundation for subsequent production. The FOPLP factory is currently in the equipment installation phase and is expected to begin limited production in Q3 2026.

SpaceX is the main driver of this strategy. The company plans to integrate satellite chip packaging processes to reduce costs and achieve complete control over Starlink components. Before its independent production capacity is built, the company purchases RF and power management chips from STMicroelectronics and Innolux, but these external purchases will gradually decrease after internal capacity increases in 2027.

According to media reports, Musk has recruited technicians from Intel, TSMC, and Samsung, demonstrating his strong focus on the chip business.

Wafer fab targets one million units capacity

To fully realize chip self-sufficiency, Musk plans to build a large wafer fab with an initial monthly production target of 100,000 units, and a final target of 1 million units. Although the plant is difficult to match TSMC in advanced process nodes, it will have the capability to produce at 14nm and more advanced process levels, sufficient to support robotics, autonomous driving, and satellite network business needs.

This production plan allows Tesla and SpaceX to avoid geopolitical risks and capacity constraints. Stable chip supply is vital for Tesla’s autonomous driving technology and SpaceX’s Starlink project.

Musk previously had disputes with TSMC over production capacity priority, which became one of the direct motivators for building his own supply chain. By controlling the full process from design to manufacturing, Musk’s companies can arrange production according to their own needs and schedules, free from external supplier limitations.

Self-owned supply chain responds to peak AI demand

The strategy of building a self-owned supply chain aligns with Musk’s goal of coping with the surge in future AI demand. As artificial intelligence applications expand, chip demand is expected to continue rising, and relying on external suppliers may encounter delivery bottlenecks during peak periods.

Musk’s approach is essentially building a self-contained system similar to TSMC and Tokyo Electron, but on a scale and focused specifically on his own companies. This vertical integration model provides greater flexibility and security at key supply chain links.

Starting in the second half of 2026, Musk’s companies will gradually withdraw production orders from partners and switch to internal manufacturing. This transition directly impacts the order volumes of existing suppliers and also marks the acceleration of the tech giant’s self-sufficiency trend in the chip sector.

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