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On a chip, even something as basic as selecting one input from a register file has to be built out of AND and OR gates wired together. Simple-seeming operations end up surprisingly expensive. Reiner Pope showed me how this stacks up. In older generations of chips, most of the...

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Many still don’t understand why Elon is building Terafab Terafab is an extension to all the chip makers in the world It’s not about replacement, not a rivalry and absolutely not competing It’s being built to fulfill the massive chip orders that Tesla, SpaceX and xAI actually need TSMC’s most advanced 2nm capacity is totally booked through 2028 Tesla signed a massive $16.5 billion deal with Samsung back in July 2025 to produce AI6 chips at their Taylor, Texas factory and Samsung is building a Tesla Exclusive chip manufacturing plant to full fill this orders When Elon announced Terafab on March 21, 2026...he made it clear: “That rate is much less than we’d like. We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab” He basically told the chip makers: “Produce as much as you comfortably can. We will take them all. Actually we want even more” Even today Elon said: "SpaceX/Tesla will be always be major customers of TSMC and not competitors in the normal sense of the word" Current production rates are much less than they need....That’s why Terafab exists Terafab is an extension to every chip maker… not competition, not rivalry, absolutely not Even Intel has joined as a partner Even if chip supply improves, massive bottlenecks still exist with memory and advanced packaging You simply can't risk those supply chain breaks at this scale That’s why Terafab is being built to vertically integrate everything - chips, memory, advanced packaging all under one roof, targeting 1 terawatt of AI compute capacity per year This is a ludicrous amount of chips that no chipmaker currently produces at this scale. I don't think even TSMC and Samsung truly understand these numbers yet It’s about building the capacity the future actually demands

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ELON MUSK: We believe the AI5 chip will be roughly comparable performance to an NVIDIA Blackwell, and at much less than 10% of the cost Transcription: I'm super hardcore on chips right now as you may be able to tell. I have chips on the brain. I dream about chips, Literally! Because in order to have a functional robot, you have to have a great AI chip. And it needs to be an inexpensive chip and it needs to be very power efficient So we think we believe the AI5 chip will be probably about a third of the power of say something like a Blackwell, an NVIDIA Blackwell, which is a great chip, for roughly comparable performance. And much less than 10% of the cost. This is a chip that is very much optimized for the Tesla AI software stack. So it's not meant to be a general purpose chip, it's meant to be an amazing chip for the Tesla AI software And I mean a couple of things that I think make... like how is Tesla able to achieve such an improvement? I think it is because we are specialized. We're not trying to... you know, NVIDIA has to serve the superset of all past and future customers. So all of their requirements, all of the software that they've written has to work, which is a very difficult problem. Whereas we just need to make it work for our software. And so we're able to simplify the chip dramatically And then we also, I think we're unique in this, but like we have an integer-based system. And integer operations are fundamentally more efficient than floating point operations. So we can do floating point, but the vast majority of our inference is done in integer. Which is, if you're familiar with sort of logic gates, the simplicity of integer... it's integer is much more power efficient, much more silicon efficient, but you have to, you actually have to train for integer inference, which everyone else is training for floating point. That's kind of like a niche technical detail, but it's actually very important. So, yeah, this is going to be a great chip So this chip will be made in basically in four places: TSMC Taiwan, Samsung Korea, TSMC Arizona, and TSMC Texas. And we already know what improvements to make for AI6. So I'm hopeful that we can within less than a year of AI5 starting production, we can actually transition in the same fab to AI6 and double all of the performance metrics

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