Elon Musk on Thursday signaled that Tesla Inc. may need to build a "gigantic chip fab" to support its artificial intelligence ambitions, and floated the possibility of working with struggling U.S. chipmaker Intel Corp.

Speaking at Tesla ’ s annual shareholder meeting, Musk outlined plans for the company ’ s fifth-generation AI chip, which will power its autonomous driving technology, including the Full Self-Driving software. "You know, maybe we ’ ll do something with Intel," Musk said to an enthusiastic audience. "We haven ’ t signed any deal, but it ’ s probably worth having discussions with Intel."

Intel, which operates its own manufacturing facilities, has fallen behind Nvidia Corp. in the fast-growing AI chip market. The U.S. government recently took a 10% stake in Intel as the company seeks external customers for its most advanced manufacturing technology. Following Musk ’ s remarks, Intel shares rose 4% in after-hours trading. Intel declined to comment on potential talks with Tesla.

Musk also celebrated a victory at the meeting as shareholders approved a $1 trillion pay package tied to the company ’ s performance over the next decade, cementing his influence and supporting his vision of transforming Tesla into a leader in AI and robotics.

Tesla has previously indicated that it is working with Taiwan Semiconductor Manufacturing Co. ( TSMC ) and Samsung Electronics Co. on AI chips. The AI5 chip, which will succeed the company ’ s current fourth-generation chip, is expected to see limited production in 2026, with high-volume manufacturing likely in 2027. Musk noted that AI6, the next iteration, would use the same facilities but deliver roughly double the performance, with volume production targeted for mid-2028.

"Even when we extrapolate the best-case scenario for chip production from our suppliers, it ’ s still not enough," Musk said. "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." He described the fab as potentially handling at least 100,000 wafer starts per month, a measure of semiconductor output.

Musk emphasized that the new chips would be inexpensive, power-efficient, and optimized for Tesla software. He projected the AI5 chip would consume roughly a third of the power used by Nvidia ’ s Blackwell chip while costing only 10% as much to produce.

"I ’ m super hardcore on chips right now, as you may be able to tell," Musk said. "I have chips on the brain."

Industry analysts noted that Tesla ’ s move reflects the company ’ s broader push to vertically integrate its AI hardware, a strategy designed to reduce reliance on third-party suppliers and control the pace of innovation. By potentially building its own massive fabrication facility, Tesla would join a small group of companies capable of high-volume semiconductor manufacturing — a costly and complex undertaking that has challenged even established chipmakers.

Tesla did not provide further details on the potential location, timeline, or funding for the proposed fab. Musk ’ s comments, however, underscore the company ’ s growing focus on AI hardware as central to its future growth, particularly as competition intensifies in autonomous driving and AI-driven robotics.