*

Musk says 'worth having discussions' with Intel ( INTC ) to make

chips

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Massive fab needed to make the volume of chips needed

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Targeting power-efficient chip at one-tenth the cost of

Nvidia's ( NVDA )

Blackwell

By Sayantani Ghosh

SAN FRANCISCO, Nov 6 (Reuters) - CEO Elon Musk on

Thursday said Tesla probably will have to build "a

gigantic chip fab" to make artificial intelligence chips and

publicly mused the EV maker could work with Intel ( INTC ).

Tesla is designing its fifth-generation AI chip to power its

autonomous ambitions, and Musk at the company's annual meeting

laid out potential manufacturing plans.

"You know, maybe we'll, we'll do something with Intel ( INTC )," Musk

said to a cheering crowd of Tesla shareholders. "We haven't

signed any deal, but it's probably worth having discussions with

Intel ( INTC )."

Struggling U.S. chipmaker Intel ( INTC ) has its own

chipmaking factories, but has lagged far behind Nvidia ( NVDA )

in the AI chip race. The U.S. government recently took a 10%

stake in Intel ( INTC ), which needs to find an external customer for its

newest manufacturing technology. Intel ( INTC ) shares popped 4% in

after-hours trading on Musk's remarks.

Intel ( INTC ) declined to comment.

Musk scored an important victory on Thursday as shareholders

approved a $1 trillion pay package over the next decade,

endorsing his vision of morphing the EV maker into an AI and

robotics juggernaut.

Musk has teased the AI5 chip before and reiterated that

Tesla was also partnering with Taiwan's TSMC and South

Korea's Samsung. The AI chips power Tesla's

autonomous driving systems, including the Full Self-Driving

software. Tesla is currently on its fourth-generation chip.

A small number of AI5 units would be produced in 2026, with

high volume production only possible in 2027, Musk said in an X

post on Tuesday, adding that AI6 will use the same fabs but

achieve roughly twice the performance with volume production

mid-2028.

"Even when we extrapolate the best-case scenario for chip

production from our suppliers, it's still not enough," he said

on Thursday.

"So I think we may have to do a Tesla terafab. It's like

giga but way bigger. I can't see any other way to get to the

volume of chips that we're looking for. So I think we're

probably going to have to build a gigantic chip fab. It's got to

be done," he said.

Musk, who often talks about his vision for the company in

abstract terms, did not offer details of how such a fab would be

built, but he said that it would make at least 100,000 wafer

starts per month. A wafer start is the measurement of the output

of a semiconductor wafer plant.

He did say the chip would be inexpensive, power-efficient

and optimized for Tesla's own software. This chip would probably

consume about a third of the power used by Nvidia's ( NVDA ) flagship

Blackwell chip, at 10% of the cost to make, Musk said.

"I'm super hardcore on chips right now as you may be able to

tell," he said. "I have chips on the brain."