Tesla CEO Elon Musk says the company will likely need to build a “gigantic” semiconductor fabrication plant to keep up with its artificial intelligence and robotics ambitions.

“One of the things I’m trying to figure out is — how do we make enough chips?” Musk said at Tesla’s annual shareholders meeting Thursday.

Tesla currently relies on contract chipmakers Taiwan Semiconductor Manufacturing Company and Samsung Electronics to produce its chip designs. Musk said he was also considering working with U.S. chip company Intel. 

“But even when we extrapolate the best-case scenario for chip production from our suppliers, it’s still not enough,” he said.

Tesla would probably need to build a “gigantic”  chip fab, which Musk described as a “Tesla terra fab.” “I can’t see any other way to get to the volume of chips that we’re looking for.” 

Microchips are the brains that power almost all modern technologies, including everything from consumer electronics like smartphones to massive data centers, and demand for them has been surging amid the AI boom.

Tech giants, including Tesla, have been clamoring for more supply from chipmakers like TSMC — the world’s largest and most advanced chipmaker. 

According to Musk, Tesla’s potential fab’s initial capacity would reach 100,000 wafer starts per month and eventually scale up to 1 million. In the semiconductor industry, wafer starts per month is a measure of how many new chips a fab produces each month.

For comparison, TSMC says its annual wafer production capacity reached 17 million in 2024, or around 1.42 million wafer starts per month.

While Tesla doesn’t yet manufacture its own microchips, the company has been designing custom chips for autonomous driving for several years.

It is currently outsourcing production of its latest-generation “AI5” chip, which Musk said will be cheaper, power-efficient, and optimized for Tesla’s AI software.

The CEO also announced on Thursday that Tesla will begin producing its Cybercab — an autonomous electric vehicle with no pedals or steering wheel — in April.

Musk’s statements underscore Tesla’s shift into AI and robotics — industries the CEO sees as the future of the global economy. 

“With AI and robotics, you can actually increase the global economy by a factor of 10, or maybe 100. There’s not, like, an obvious limit,” Musk said at the shareholder meeting. 

October’s job losses in the U.S. were nearly twice as high as a month earlier — the steepest for any October since 2003, data from outplacement firm Challenger, Gray & Christmas showed.

The technology sector was the hardest hit, with 33,281 cuts, almost six times September’s total.

Being laid off is an awful feeling — and it must feel bitterly ironic to work in a field that’s developing the very technology making you redundant.

One person spared both redundancy fears and existential doubt is Tesla CEO Elon Musk, who just had a nearly $1 trillion pay package approved by Tesla shareholders.

To earn the full trillion, though, Musk has to meet a chain of performance targets, culminating in Tesla reaching an $8.5 trillion valuation.

Its market cap is currently $1.54 trillion — by contrast, the world’s most valuable company now is Nvidia, which briefly hit a $5 trillion valuation last Wednesday.

After Thursday’s slump in tech stocks, however, Nvidia’s market cap has dipped to a “mere” $4.57 trillion.

Other tech companies, such as Microsoft, Broadcom and Palantir Technologies, also fell broadly over concerns that their stock prices are too high. Those moves dragged the tech-heavy Nasdaq Composite down by 1.9%.

For most tech workers and investors, Thursday was another reminder of volatility’s sting. For Elon Musk, it was just another day on the road to the stratosphere.

Inside the Gulf’s trillion-dollar AI gamble

After raking in trillions of dollars in oil revenue, the Gulf monarchies have become known for splashing cash on big-ticket projects like sci-fi-worthy cities in the desert, major sports franchises, and advanced military hardware.

Now, though, as they face prolonged lower crude prices, some of the region’s leaders are looking at leveraging their vast sovereign capital to build domestic artificial intelligence industries.

— Emma Graham

Shares of Japan’s SoftBank Group resumed their slide on Friday, following a broader slump in AI-related stocks as investors once again grew wary of the sector’s lofty valuations.

The group, which holds a wide range of AI investments across infrastructure, semiconductor, and application companies, saw shares drop more than 8%.

This comes after SoftBank gained nearly 3% in the previous session, having plunged 10% on Wednesday to clock its worst day since April. It stares at about $53 billion market cap wipeout this week and its worst weekly loss since March 2020, if Friday’s losses hold.

“SoftBank Group’s shares are falling as many bought it as the only listed proxy for OpenAI,” said David Gibson, senior research analyst at financial services firm MST Financial.

The pullback reflects growing caution around the AI sector and a realization that many of OpenAI’s partnerships are still potential rather than confirmed, with funding prospects uncertain, he told CNBC.

OpenAI CEO Sam Altman reportedly said the company has spoken with the U.S. government about potential federal loan guarantees to encourage chip factory construction. His comments came after OpenAI’s CFO suggested the firm hoped for federal help in securing chip financing.

SoftBank holds a controlling stake in U.K.-based semiconductor designer Arm Holdings, whose chips help power mobile and AI processors globally. Shares of Nasdaq-listed Arm slid 1.21% overnight.

Separately, Bloomberg recently reported citing people familiar with the matter that the group considered acquiring U.S. chipmaker Marvell Technology Inc. earlier this year.

Other Japanese tech stocks also declined. Semiconductor testing equipment maker Advantest dropped over 6%, chipmaker Renesas Electronics fell nearly 4%, Tokyo Electron, a chip production equipment maker, declined 1.46%.

Shares of the world’s largest chipmaker, TSMC, fell 0.6%.

Nvidia-supplier SK Hynix was down over 1% and South Korean peer and memory chipmaker Samsung fell 0.5%.

The declines in Asian tech stocks also come after AI-related companies in the U.S. fell overnight

Qualcomm dropped almost 4%, despite strong quarterly results, after warning it could lose future Apple business. AMD, a strong performer Wednesday, slipped 7%, while Palantir and Oracle were down about 7% and 3%, respectively. Nvidia and Meta Platforms also finished lower.

The excitement surrounding AI has raised worries that markets might be experiencing a tech bubble. Some experts argue that the valuations of AI companies are starting to resemble the dot-com bubble of the late 1990s, with stock prices rising well beyond realistic profit forecasts.

The economic impact of artificial intelligence is undeniable and market bumps are inevitable, said Laura Cooper, global investment strategist at Nuveen.

“Still, it’s too soon to call a bubble. Today’s AI capex is being funded largely by cash-rich firms with solid balance sheets, not cheap credit or speculation,” she said. “The greater risk isn’t a bubble bursting, but valuation fatigue — investors tiring of paying ever-richer premiums for AI returns that don’t materialize quickly enough.”