This article first appeared on GuruFocus.
Tesla (TSLA, Financials) CEO Elon Musk said the company may have to build a large semiconductor plant to produce chips for its next generation of AI systems. Speaking to shareholders at Tesla’s annual meeting, Musk said the company is designing its fifth-generation AI processor, called the AI5, to support self-driving and robotics efforts.
Musk told investors it probably makes sense to talk with Intel (INTC, Financials) about working together. Intel’s shares rose after the remarks, as the chipmaker looks to attract new clients for its manufacturing technology. The U.S. government recently took a 10% stake in Intel to support domestic chipmaking capacity.
Musk said Tesla’s planned chip would be far cheaper and more efficient than Nvidia’s top model, using about one-third of the power at a fraction of the cost. He also said demand for chips is growing faster than suppliers can keep up, prompting the need for Tesla’s own facility.