Memory chips are the oil of the AI boom, and right now they are hard to get. So when Elon Musk used Tesla’s quarterly call to publicly thank Micron, it was worth noticing. Suppliers rarely get shout-outs. Scarce ones do.
Micron recently gave Tesla a “significant allocation” of memory on “reasonable terms,” Musk said, according to Bloomberg. That matters, because memory is in short supply and prices are high. The global build-out of AI has soaked up chips and left other industries scrambling.
The thank-you, though, sat oddly next to Musk’s longer game. He is quietly building the capacity to not need Micron at all.
Enter Terafab #
The project is called Terafab, a joint effort between Tesla and SpaceX to make computing and memory chips at, in Musk’s words, unprecedented scale. A research fab is going up at Giga Texas, a roughly $3bn start able to turn out a few thousand wafers a month.
The full build-out could run from $55bn to $119bn, CNBC reported, with Intel signed on to help design and fabricate.
Musk was blunt about the reason. Terafab is “not to get leverage over our chip suppliers,” he said. “It is to ensure that we have enough chips down the road.” The industry, he argued, is not growing fast enough in logic or memory to meet his needs “unless we also make chips ourselves.”
Not even a top customer #
There is a humbler truth underneath. For all Tesla’s fame, it is not a memory heavyweight. Neither Tesla nor SpaceX ranks among Micron’s top 10 customers, according to Bloomberg data.
Tesla also lacks the chequebook of the hyperscalers locking up supply for years. Micron did not respond to a request for comment, though it has every reason to keep a marquee name happy.
So the gratitude and the fab are two sides of the same worry. Tesla needs chips it cannot reliably buy, from a supplier whose bigger customers come first, in a market where Micron’s value has soared.
Thanking Micron today and building Terafab for tomorrow is not a contradiction. It is the plan. Whether a car company and a rocket company can also become a chipmaker is the $119bn question.
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