Tesla Earnings Call - Intel 14A, Research (Tera)Fab details, Supplier Leverage?

[Xebec]

A few interesting "Semi relevant" details from the Q1 2026 Tesla Earnings call today:

- Tesla is spending $3B towards TeraFab this year - to build a Research Fab, to "try out new physics", "will probably produce 1,000 wafers/month or so" (acknowledging very small scale initially). He indicated they have some long shot ideas for improving semi fabrication they want to try.
- TeraFab full scale plan still in the works, board members and others between SpaceX and Tesla must be consulted first before plan is finalized.
- Musk: "Terafab is NOT to get leverage over our chip suppliers, it is to ensure that we have enough chips down the road" -- "the rate that the industry is growing, both in logic and memory [is not enough to meet our needs unless we also make chips ourselves]"

- Regarding the Intel partnership - ~ [still being figured out], but "Tesla will use Intel 14A in the future, [by the time it is mature]". He sung praise on LBT and a few others at Intel.

- AI Hardware 4 is getting a minor upgrade later this year - 10% more bandwidth and ASIC clock speed, 2X the memory (32GB per AI4 chip). Samsung is doing the engineering for Tesla for this, [we are beholden to Samsung for the date]. (Note: probably some vagueness here to avoid the Osborne effect).

- AI5 not coming for Tesla Self driving right away even after availability, AI4 will be around a long time. HW3 not able to meet FSD unsupervised, we will have to build large depots for AI4/HW3 retrofits due to the amount of work (cameras, AI hardware, etc) and for the opportunity to convert all HW3 cars to the Robotaxi fleet if desired.

Webcast: https://ir.tesla.com/#quarterly-disclosure

P.S. These are my semi-paraphrased human-made notes.

 

[floppydisk]

Some relevant Tera/GigaFab and Intel bits:

Will Stein of Truist: Great. Thanks for taking my question. Considering the various parties involved in the Terafab project, I’m hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project, funding it, designing it, building it, operating, taking production, and the like. We’d love to hear some more details.

Elon Musk: Yeah. We’re still working out the details of the Terafab deployment. In the near term, Tesla will be building the research fab on our Giga Texas campus. This is something we expect to be probably a $3 billion-ish initiative, and capable of maybe a few thousand wafers per month. It’s really intended to try out ideas, the research fab, both in terms of maybe we have some ideas for improving the fundamental technology of how chips are made. There’s some new physics we’d like to test out, but we also want to test out the ability to see if something is working in production. You need a few thousand wafer starts a month, to make sure that a production process is sound. SpaceX is going to take care of the initial phase of the scaled up Terafab. That’s what we’ve figured out thus far.

Any kind of intra-company thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution. It’s going to have, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there. It takes a while to work through the kind of independent director reviews on this. That’s basically what we’ve figured out thus far is Tesla’s doing the research fab, SpaceX is doing the initial part of the large scale Terafab, and then we’ve got to figure out the rest.

Will Stein: What about Intel’s involvement?

Elon Musk: Yeah. Intel is excited to partner with us on some of the core manufacturing technologies. We plan to use Intel’s 14A process, which is state-of-the-art and in fact, not yet totally complete. Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time, 14A seems like the right move. We have a great relationship with Intel. A lot of respect for the CEO, the CTO and the new team there. We think it’s going to be a great partnership.

Vaibhav Taneja: Yeah. The other thing on the research fab, I think we’ve said it before, we plan to do memory, logic, everything in the same place, including mask, because we want to have a quick iteration loop so that we can see and basically scale the technologies which we are trying to bring up.

Elon Musk: Yeah. I think this will be unique in the world, or at least I’m not aware of any place where you have the lithography mask creation, and then logic, memory and packaging under one roof in one building. That’s about the fastest I could possibly imagine doing recursive research and development and being able to try out some pretty radical ideas, some of which have. It’s kind of long shot stuff, but if some of these long shots pan out, would be radical improvements in the way chips work.

 

[Fred Chen]

Elon Musk: Yeah. Intel is excited to partner with us on some of the core manufacturing technologies. We plan to use Intel’s 14A process, which is state-of-the-art and in fact, not yet totally complete. Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time, 14A seems like the right move. We have a great relationship with Intel. A lot of respect for the CEO, the CTO and the new team there. We think it’s going to be a great partnership.

So they wish to transfer the 14A process from Intel to Terafab?

 

[hist78]

Some relevant Tera/GigaFab and Intel bits:

Will Stein of Truist: Great. Thanks for taking my question. Considering the various parties involved in the Terafab project, I’m hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project, funding it, designing it, building it, operating, taking production, and the like. We’d love to hear some more details.

Elon Musk: Yeah. We’re still working out the details of the Terafab deployment. In the near term, Tesla will be building the research fab on our Giga Texas campus. This is something we expect to be probably a $3 billion-ish initiative, and capable of maybe a few thousand wafers per month. It’s really intended to try out ideas, the research fab, both in terms of maybe we have some ideas for improving the fundamental technology of how chips are made. There’s some new physics we’d like to test out, but we also want to test out the ability to see if something is working in production. You need a few thousand wafer starts a month, to make sure that a production process is sound. SpaceX is going to take care of the initial phase of the scaled up Terafab. That’s what we’ve figured out thus far.

Any kind of intra-company thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution. It’s going to have, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served, and strike the right balance there. It takes a while to work through the kind of independent director reviews on this. That’s basically what we’ve figured out thus far is Tesla’s doing the research fab, SpaceX is doing the initial part of the large scale Terafab, and then we’ve got to figure out the rest.

Will Stein: What about Intel’s involvement?

Elon Musk: Yeah. Intel is excited to partner with us on some of the core manufacturing technologies. We plan to use Intel’s 14A process, which is state-of-the-art and in fact, not yet totally complete. Given that by the time Terafab scales up, 14A will be probably fairly mature or ready for prime time, 14A seems like the right move. We have a great relationship with Intel. A lot of respect for the CEO, the CTO and the new team there. We think it’s going to be a great partnership.

Vaibhav Taneja: Yeah. The other thing on the research fab, I think we’ve said it before, we plan to do memory, logic, everything in the same place, including mask, because we want to have a quick iteration loop so that we can see and basically scale the technologies which we are trying to bring up.

Elon Musk: Yeah. I think this will be unique in the world, or at least I’m not aware of any place where you have the lithography mask creation, and then logic, memory and packaging under one roof in one building. That’s about the fastest I could possibly imagine doing recursive research and development and being able to try out some pretty radical ideas, some of which have. It’s kind of long shot stuff, but if some of these long shots pan out, would be radical improvements in the way chips work.

Vaibhav Taneja is Tesla’s CFO. Given what he and Elon Musk have described, is $3 billion too little for the research fab/lab?

 

[hist78]

So they wish to transfer the 14A process from Intel to Terafab?

It only makes sense if Intel is going to spin off its manufacturing division, Intel Foundry.

 

[Fred Chen]

It only makes sense if Intel is going to spin off its manufacturing division, Intel Foundry.

Indeed, with the targeted output of Terafab being so much larger, they'd become the foundry rival to Intel.

 

[Xebec]

Vaibhav Taneja is Tesla’s CFO. Given what he and Elon Musk have described, is $3 billion too little for the research fab/lab?

FWIW I think he worded it as "allocated this year", more in 2027..

 

[Barnsley]

Vaibhav Taneja is Tesla’s CFO. Given what he and Elon Musk have described, is $3 billion too little for the research fab/lab?

Appreciate many here like to stroke Musk ego.

3Bn maybe get you 1 litho tool and 1 inspection/ repair tool at the top end.

GF just spent that in Singapore and they got a mirror FAB that can do 22nm on a good day.

 

[MKWVentures]

Good info on Terafab. 1000W per month is fine for a small R&D pilot line. 3B should be good for initial spending.
He wants to have Internal capacity to support his projects since external fabs cannot. This is a good reason to use IDM model. Maybe even a TI like Fab Lite deal.

14A has a customer.... not we just need to know when and how much. License+manufacturing?? how much revenue impact? Maybe LBT can tell us today?????

Can you imagine having so much money that you can do a 25B fab experiment to "try some stuff out".... ?

 

[Barnsley]

Good info on Terafab. 1000W per month is fine for a small R&D pilot line. 3B should be good for initial spending.
He wants to have Internal capacity to support his projects since external fabs cannot. This is a good reason to use IDM model. Maybe even a TI like Fab Lite deal.

14A has a customer.... not we just need to know when and how much. License+manufacturing?? how much revenue impact? Maybe LBT can tell us today?????

Can you imagine having so much money that you can do a 25B fab experiment to "try some stuff out".... ?

What do you believe they are getting for $3Bn?

 

[MKWVentures]

What do you believe they are getting for $3Bn?

Well its just 3B this year to start. They will get a building and a start on tools.

We still dont know the process or what the plans are and 1K wafers aint much. You can do processing at the equipment vendor to start. I imagine musk is going to think outside the box on this deal (partner with equipment vendors? A Albany like complex? who knows)

Terafab is 5T in spending...... but only 25B to start at Texas...... but only 3B this year....... lets see how this changes

I am just waiting for my orbiting space datacenters! Cannot Wait to see this

 

[Xebec]

Good info on Terafab. 1000W per month is fine for a small R&D pilot line. 3B should be good for initial spending.

With this current weird industry fixation on chips being measured in (Giga)Watts, that sentence confused me for a moment..

 

[hist78]

FWIW I think he worded it as "allocated this year", more in 2027..

Well its just 3B this year to start. They will get a building and a start on tools.

We still dont know the process or what the plans are and 1K wafers aint much. You can do processing at the equipment vendor to start. I imagine musk is going to think outside the box on this deal (partner with equipment vendors? A Albany like complex? who knows)

Terafab is 5T in spending...... but only 25B to start at Texas...... but only 3B this year....... lets see how this changes

I am just waiting for my orbiting space datacenters! Cannot Wait to see this

Assume for this scenario that TeraFab or TeraLab will take three years to construct the facility and acquire/install all the necessary tools for a leading‑edge semiconductor manufacturing process that Mr. Elon Musk has not figured out yet.

Assume that over these three years, Mr. Musk will spend $3 billion in the first year, $5 billion in the second year (when some of the machines can move in), and $4 billion in the third year to complete the fab and finish the research. It will take a minimum of $12 billion before a single chip comes out of this test facility. That already approaches half of the projected $25 billion for the entire project, yet it would produce only a few thousand wafers per month.

If Mr. Musk’s manufacturing process is indeed so revolutionary that it is capable of making logic chips, memory, packaging, testing, and masks making all under one roof, it will require many toolmakers, such as ASML, Applied Materials, Lam Research, and Tokyo Electron, to develop and build new tools for TeraFab. It will not be quick, and it will not be cheap, unless Mr. Musk plans to make those tools internally also.

Mr. Musk is building a new IDM to compete against the whole foundry ecosystem. I am wondering how $25 billion could possibly be enough.

 

[MKWVentures]

Assume for this scenario that TeraFab or TeraLab will take three years to construct the facility and acquire/install all the necessary tools for a leading‑edge semiconductor manufacturing process that Mr. Elon Musk has not figured out yet.

Assume that over these three years, Mr. Musk will spend $3 billion in the first year, $5 billion in the second year (when some of the machines can move in), and $4 billion in the third year to complete the fab and finish the research. It will take a minimum of $12 billion before a single chip comes out of this test facility. That already approaches half of the projected $25 billion for the entire project, yet it would produce only a few thousand wafers per month.

If Mr. Musk’s manufacturing process is indeed so revolutionary that it is capable of making logic chips, memory, packaging, testing, and masks making all under one roof, it will require many toolmakers, such as ASML, Applied Materials, Lam Research, and Tokyo Electron, to develop and build new tools for TeraFab. It will not be quick, and it will not be cheap, unless Mr. Musk plans to make those tools internally also.

Mr. Musk is building a new IDM to compete against the whole foundry ecosystem. I am wondering how $25 billion could possibly be enough.

I think you are confusing some comments like I did until I was corrected last week.

1) Terafab in Texas is not a terafab. it is an R&D center. It will take 2-3 years to build. Proof of concept 25B total
2) Terafab dream is that Musk needs more chips than the Entire ecosystem today to build his AI datacenters in space. The fabs would be everything everywhere all at once. Trillion+ spending.... hmmm
3) the 3B is to start the R&D center. Apparently they will license technology from Intel and do some other stuff. Maybe Intel gives fabs to Musk for terafab.... who knows. Intel does have lots of basebuild and shells that are not used today.

Lets see IF the texas R&D site comes up before we worry about the dream. Its all just affirmations at this point

Personally, I think Musk will land a spacecraft on the sun before there is a real Terafab [Musk says you can land on the sun, you just have to do it at night )

 

[floppydisk]

More from LBT in the Intel earnings call today. Just touches on Terafab but sounds like 14A is going about as well as one could hope...

LBT: For the last few years, the story around high performance computing was almost exclusively about GPU and other accelerators. In recent months, we have seen clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era. CPU now serves as the orchestration layer and critical control plane for the entire AI stack. This is not just our wishful thinking. It is what we hear from our customers, and it is evident in the demand profile for our products. Xeon server demand is seeing strong and sustained momentum. Customers are deploying server CPUs along accelerators in the ratio that is moving back towards CPU. The accelerator remains central to frontier AI, and we will continue to participate, innovate, and partner in that category

...

LBT: We have made steady progress with Intel 4 and Intel 3, and 18A yields are now running ahead of the internal projections, representing a meaningful inflection in our execution and our factory finished goods output. We also continue to make steady progress on our advanced packaging technologies, including additional growth in customer backlog in the quarter. On Intel 18A-P and Intel 14A, we continue to be encouraged by our external engagements. Intel 14A maturity yield and performance are outpacing Intel 18A at a similar point in time, and we continue to develop PDKs with multiple customers actively evaluating the technology. Their partnership has been critical, and their feedback is continuing to help us define the technology so that we can cater to their needs. We expect to see earlier design commitments emerge beginning in the second half of 2026 and expanding into the first half of 2027. I'm particularly pleased that our progress today has driven us to run more of our own future product types on Intel 14A as well. At the time when advanced wafer capacity is in a short supply, this enables us to have better control over our supply chain.

...

LBT: We expect Intel Foundry's operating loss to improve through the year as 18A continues to ramp into volume and yields improve further. Within the quarter, Intel Foundry delivered output above our expectations, drove steady improvements in yields, and met key 14A milestones. Intel Foundry also added to its backlog of advanced packaging services and announced a multi-year expansion of our backend facilities in Malaysia.

...

Zinsner: One thing to keep in mind, in the last few years, a lot of our CapEx spending was space. I think we're actually in a pretty good position in space. We wanted to have white space available to move into, when needed, and I think Lip-Bu and I both feel like we're in a good place. We actually will be bringing the space spend down pretty materially, even though the total is flat. What that means is the tool spend is actually increasing pretty significantly. In fact, tool spending will be up year-over-year 25% or so. That's, I think, a function of the fact that we just see a lot of demand, and we want to make sure we're catching up on the supply front.

...

LBT: We recently announced our partnership with SpaceX, xAI, and Tesla to support Terafab. Elon and I share a strong conviction that global semiconductor supply is not keeping pace with the rapid acceleration in demand. We are excited to explore innovative ways to refactor silicon process technology, looking for unconventional ways to improve manufacturing efficiency that will eventually lead to a dynamic improvement in the economics of semiconductor manufacturing. A year ago, the conversation about Intel was about whether we could survive. Today is about how quickly we can add manufacturing capacity and scale our supply to meet enormous demand for our products.

...

LBT: I think on the 14A, I think we are making great progress in terms of yield and the cycle time. Clearly, we're engaging with multiple customers, heavily engaging. As usual my style is under promise, over delivering. We have no plan to announce the customer unless the customer want to announce it, and we are supporting that. I think back to the Terafab, clearly Elon and I, we believe that global supply chain is not keeping pace with the rapid acceleration and the demand. We both share the vision that we're going to learn a lot together, exploring the innovative way and then the, in the process of the manufacturing. Saying all this, clearly it's a very broad relationship and then, we would update you as we go.

 

[siliconbruh999]

Personally, I think Musk will land a spacecraft on the sun before there is a real Terafab [Musk says you can land on the sun, you just have to do it at night )

It's possible he said about landing not returning back so he just have to land the spacecraft even If it turns to ashes.

 

[MKWVentures]

More from LBT in the Intel earnings call today. Just touches on Terafab but sounds like 14A is going about as well as one could hope...

LBT: For the last few years, the story around high performance computing was almost exclusively about GPU and other accelerators. In recent months, we have seen clear signs that the CPU is reinserting itself as the indispensable foundation of the AI era. CPU now serves as the orchestration layer and critical control plane for the entire AI stack. This is not just our wishful thinking. It is what we hear from our customers, and it is evident in the demand profile for our products. Xeon server demand is seeing strong and sustained momentum. Customers are deploying server CPUs along accelerators in the ratio that is moving back towards CPU. The accelerator remains central to frontier AI, and we will continue to participate, innovate, and partner in that category

...

LBT: We have made steady progress with Intel 4 and Intel 3, and 18A yields are now running ahead of the internal projections, representing a meaningful inflection in our execution and our factory finished goods output. We also continue to make steady progress on our advanced packaging technologies, including additional growth in customer backlog in the quarter. On Intel 18A-P and Intel 14A, we continue to be encouraged by our external engagements. Intel 14A maturity yield and performance are outpacing Intel 18A at a similar point in time, and we continue to develop PDKs with multiple customers actively evaluating the technology. Their partnership has been critical, and their feedback is continuing to help us define the technology so that we can cater to their needs. We expect to see earlier design commitments emerge beginning in the second half of 2026 and expanding into the first half of 2027. I'm particularly pleased that our progress today has driven us to run more of our own future product types on Intel 14A as well. At the time when advanced wafer capacity is in a short supply, this enables us to have better control over our supply chain.

...

LBT: We expect Intel Foundry's operating loss to improve through the year as 18A continues to ramp into volume and yields improve further. Within the quarter, Intel Foundry delivered output above our expectations, drove steady improvements in yields, and met key 14A milestones. Intel Foundry also added to its backlog of advanced packaging services and announced a multi-year expansion of our backend facilities in Malaysia.

...

Zinsner: One thing to keep in mind, in the last few years, a lot of our CapEx spending was space. I think we're actually in a pretty good position in space. We wanted to have white space available to move into, when needed, and I think Lip-Bu and I both feel like we're in a good place. We actually will be bringing the space spend down pretty materially, even though the total is flat. What that means is the tool spend is actually increasing pretty significantly. In fact, tool spending will be up year-over-year 25% or so. That's, I think, a function of the fact that we just see a lot of demand, and we want to make sure we're catching up on the supply front.

...

LBT: We recently announced our partnership with SpaceX, xAI, and Tesla to support Terafab. Elon and I share a strong conviction that global semiconductor supply is not keeping pace with the rapid acceleration in demand. We are excited to explore innovative ways to refactor silicon process technology, looking for unconventional ways to improve manufacturing efficiency that will eventually lead to a dynamic improvement in the economics of semiconductor manufacturing. A year ago, the conversation about Intel was about whether we could survive. Today is about how quickly we can add manufacturing capacity and scale our supply to meet enormous demand for our products.

...

LBT: I think on the 14A, I think we are making great progress in terms of yield and the cycle time. Clearly, we're engaging with multiple customers, heavily engaging. As usual my style is under promise, over delivering. We have no plan to announce the customer unless the customer want to announce it, and we are supporting that. I think back to the Terafab, clearly Elon and I, we believe that global supply chain is not keeping pace with the rapid acceleration and the demand. We both share the vision that we're going to learn a lot together, exploring the innovative way and then the, in the process of the manufacturing. Saying all this, clearly it's a very broad relationship and then, we would update you as we go.

Interesting call. The 10Q has some details on the ireland agreement and why it needed to be ended. The financial impacts show up in Q2.

Intel is adding Capex for 10/7 as well as Intel 3 and 18A. I also think he he said 18A volume increases 6x??? in Q2 over Q1 leading to lower GM.

Looks like 14A is happening. Only question is when Intel starts to get external revenue on wafers or packaging. External revenue was <100M from companies other than Altera (former Intel). look forward to see when the losses stop for IFS.

couple questions:

Did he say 14A PDK0.5 was released? then there was something about PDK0.9 which is where design can start. what does this mean for production revenue? @Daniel Nenni

was Clearwater Forest mentioned?



Rumor is that the Musk partnership is strategic, not financially material for at least 2 years. Lets see what LBT shares with the team.

 

[floppydisk]

Did he say 14A PDK0.5 was released? then there was something about PDK0.9 which is where design can start. what does this mean for production revenue? @Daniel Nenni

was Clearwater Forest mentioned?

LBT: Now clearly, we really drive the yield improvement. We see a very nice yield improvement on the 18A. The 14A, we already have the 0.5 PDK available, and now we are aiming for the 0.9 PDK.

I don't believe Clearwater Forest was mentioned though.

 

[siliconbruh999]

Clearwater Forest has just disappeared tbh it's become a niche product.

 

[Xebec]

Rumor is that the Musk partnership is strategic, not financially material for at least 2 years. Lets see what LBT shares with the team.

It is a step forward from "If we don't get any customers, then we won't make 14A", at least