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.