On SpaceX’s earnings call on October 20, Elon Musk made a prediction about the AI boom:
Jeff Brown says Elon first went to the world’s biggest chipmakers and told them he would buy all of their chips. They couldn’t sell him that many. At Terafab’s launch in March, Musk put the gap this way: “All of the rest of the output from Earth is about 2% of what we need.”
So Elon is making his own. Terafab is the chip project Tesla and SpaceX are building in Texas. On the same call, Musk said he hopes to have a first working test chip around May or June of next year, and his goal is volume production around the third quarter of 2028. He also thanked ASML and his other suppliers for “accelerating equipment deliveries.”
Jeff has seen the project up close. He spent more than two decades as a senior executive at Qualcomm, NXP Semiconductors and Juniper Networks, two of them chip companies. And he rode a Cybercab, with no steering wheel and no pedals, to Terafab’s first phase in Austin, where he says Elon is getting ready to begin making his own AI chips. He says Tesla’s Gigafactory in Texas, the size of 174 football fields, looks tiny next to the planned Terafab.
He says what matters most is one machine.
“It’s Just Physics”
As a former executive at two chip companies, Jeff says building a chip is an incredibly complex process. A single chip, he explains, packs tens of billions of tiny switches onto a square the size of a large postage stamp. Building it takes precision at the atomic level, and “one of the most precise machines humans have ever built.”
“This is not a guess. It’s not a prediction. It’s just physics,” Jeff says. “If Elon wants to build chips, he will need that machine.”
He believes he’s found the little-known company that will supply it. And he says Intel, Elon’s Terafab partner since April, has worked with this company for decades.
He’s Been Early Before
Jeff says his background helped him pick Nvidia before it jumped as high as 37,800%, and Tesla before it jumped almost 2,200%.
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He recommended Tesla in November 2018, while the media was mocking Elon: “When I think about Tesla, I see one of the leading artificial intelligence companies in the world.” And in 2019, while parts of the media called Starlink a “pipe dream,” he predicted it would get up and running and start selling its service. A year later, he says, it did.
He still calls Tesla a great company over the long term. “But I’m not here to recommend Tesla,” he says.
Three Steps, Three Picks
Jeff says the chips are step one of Elon’s three-step AI plan. He’s picked a little-known company for each step.
Step 1: Chips
Elon’s Terafab chip project. Jeff believes he’s found the company that will supply the chip-making machine it needs.
Step 2: Energy
Jeff says Elon plans to put AI chips on satellites, powered by the sun. His pick is a company he says has worked with SpaceX for more than a decade, on chips used in every Starlink satellite and ground terminal.
Step 3: Robots
Self-driving Cybercabs and Optimus, Tesla’s humanoid robot. His pick is a company he says already supplies Tesla with a key piece of sensor technology. He wouldn’t be surprised if it ends up supplying Optimus too.
The short version
- Musk says the shortage of AI computing power will last a long time, so Tesla and SpaceX are building Terafab to make their own chips.
- Jeff Brown, a former chip executive, says Elon can’t make those chips without one machine, and he believes he’s found its supplier.
- It’s one of three picks, one for each step of Elon’s AI plan: chips, energy and robots.
Jeff’s free presentation lays out all three steps. The companies’ names come with a paid subscription to The Near Future Report, which renews automatically each year.
Free to watch · Investing involves risk · Elon Musk hasn’t endorsed Jeff’s research. The picks are Jeff’s.
