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| The chip shortage is very real, and Tesla's new chip manufacturing business Terafab can help ease the pressure. |
Just one week ago, Tesla and xAI's parent company, SpaceX, announced a new company called Terafab, with the goal of being a US-based chip manufacturer. The goal, according to Elon Musk, chairman and CEO of Tesla, would be to manufacture the AI brain of the Tesla vehicles inside of it's autonomous cars.
Previously, the AI chips inside of the Tesla vehicles were not manufactured in-house, but rather, fabricated with the help of companies like Samsung in South Korea, and TSMC in Taiwan. However, with all the pressure these two companies are under due to the AI boom of the post-Covid 19 world, Tesla is pivoting toward manufacturing their own chips in the United States.
When asked by Tesla CEO Elon Musk, he hinted that the company is considering working with Intel on this project.
We haven't signed any deal, but it's probably worth having discussions with Intel...
Chip fabrication -unlike chip assembly or manufacturing- is one of the most notoriously difficult and costly industries in the tech world, with only a handful of companies in the world that can do it, let alone do it well. TSMC is the top company in the world for this sort of thing, with its 6 nanometer process, and relatively high volume. The only two other companies in the world doing most of the world's chip manufacturing are Samsung, SK Hynix, (both in South Korea,) and Micron in the United States. So, Elon Musk's announcement was met with skepticism.
Reddit user BruhMansky on the r/RealTesla subreddit had this to say:
No evidence of Terafab being real
by u/BruhMansky in RealTesla
Many skeptics seem to think this new Terafab initiative is all just smoke and mirrors to boost the Tesla stock price, with no real plans on making any of this happen.
Why everything is so expensive
It wasn't that long ago that Cryptocurrency and NFTs practically obliterated the market for GPUs that gamers used for video GAMES. That is happening again, only this time, AI is leeching off of the gaming hardware market, leveraging the APUs inside of most GPUs for deep learning.
Unlike previous trends, this is a lot worse. AI doesn't just need the hardware in GPUs; it needs a ton of RAM to run models, and a hell of a lot of fast internal storage to house the training data AI needs to learn. This is causing the market to inflate like a DeviantArt fetish, with the average Solid State Drive, or DRAM chip, costing almost 4 times what they would have cost in 2024.
Right now, 64GB of DDR5 RAM will set you back almost 5 times as much as it would have cost in 2024, with costs rapidly approaching a thousand dollars. SSDs aren't doing to well price-wise either with a 2TB SSD averaging just under $300. However, nothing in the tech world is more expensive than the average flagship video card, with an Nvidia RTX 5090 costing nearly $4000.
Fake or not, Tesla would need at least one extra manufacturer outside of the big 3 to exist in order to keep up with demand.
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