Musk: AI expansion will eventually be bottlenecked by chip production capacity.

Beating AI News Flash: Musk explained at the All-In Summit why Tesla and SpaceX are building their own Terafab chip factory. He is concerned that critical chips could face supply disruptions in the future for various reasons, but even if supply remains stable, the capacity of existing wafer fabs is not enough to support AI's continued expansion.

Musk said that current wafer fabs are basically already running at full capacity. In the future, computing power will not only need to go into data centers, but also support humanoid robots and cars, and logic chips, memory, and advanced packaging will all need to be expanded together.

His conclusion is, "Either build Terafab, or expansion cannot continue." Tesla and SpaceX are advancing a joint chip production line in Austin, and equipment has already been ordered. Musk hopes to first produce usable chips by the end of next year, but there is still some time before large-scale mass production.