Tesla Q126 Earnings Call Transcript

neatly summarised to smooth out Elon's rough edges...

Back in the days when Elon first started promising Full Self Driving was coming soon, I used to follow Tesla for the autonomous technology angle. After three or so years of fruitless waiting, I basically grew tired of the earnings calls and stopped listening in. Now that Elon has made the big announcement that Intel’s A14 process will be the basis for his fantastical TeraFab, it’s probably worth tuning in again, at least in part. Here’s what he had to say earlier on this topic:

Question:

Thanks for taking my question. Considering the various parties involved in the TerraFab project, I’m hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project, funding it, designing it, building it, operating, taking production and the like. We’d love to hear some more details.

Answer:

Yeah, so we’re still working out the details of the TerraFab deployment. In the near term, Tesla will be building the research fab on our Giga Texas campus. This is something we expect to be probably, you know, a $3 billion-ish initiative and capable of maybe a few thousand wafers per month.

But it’s really intended to try out ideas, the research fab, both in terms of maybe we We have some ideas for improving the fundamental technology of how chips are made and some new physics we’d like to test out. But we also want to test out the ability to see if something is working in production. So you need kind of like a few thousand wave starts a month to make sure that a production process is sound.

Can’t wait to see the new physics he comes up with. I always thought there was just physics, new physics sounds really exciting

And then SpaceX is going to take care of the initial phase of the scaled-up TeraFab. And that’s what we’ve figured out thus far.

Great! SpaceX with its long history of semiconductor manufacturing is the perfect fit for the job :-)

Any kind of intra-company thing has to be approved by both the SpaceX and Tesla board of directors. It’s got to go through a conflict resolution. It’s kind of a lot of, unfortunately, a lot of complexity because we’ve got to make sure Tesla shareholders are served and SpaceX shareholders are served and strike the right balance there. So it takes a while to work through the kind of independent director reviews on this.

Okay, what I’m hearing is that your board members are in conflict with your TeraFab plans? I wonder why?

So, that’s basically what we’ve figured out thus far is Tesla is doing the research fab, SpaceX is doing the initial part of the large-scale Terra fab, and then we’ve got to figure out the rest.

That should be fine then. Solid plan. Just need to get those pesky board members to play ball.

And what about Intel’s involvement?

Yeah, so Intel is excited to partner with us on some of the core manufacturing technologies. So, we plan to use Intel’s 14A process, which is state of the art, and in fact, not yet totally complete. So but given that by the time TeraFab scales up, 14A will be probably fairly mature or ready for prime time. 14A seems like the right move.

That’s one part of the puzzle solved, TeraFab will use Intel’s 14A process technology, the one they threatened to throw in the dustbin last year because it was coming along so nicely. I’ll be curious to hear about the licensing arrangement Intel is after coming up with on the earnings call tomorrow.

And we have a great relationship with Intel. Lot of respect for the CEO, the CTO, and the new team there. So we think it’s gonna be a great partnership.

I genuinely hope it will be a great partnership for all concerned, albeit I seriously doubt it.

Yeah, and the other thing on the research fab, I think we’ve said it before, we plan to do memory, logic, everything in the same place, including mask, because we want to have a quick iteration loop so that we can see and basically scale the technologies which we are trying to bring up.

Ahem, Where’s the memory process going to come from?

Yeah, I think this will be unique in the world, or at least I’m not aware of any place where you’d have the lithography mask creation, and then logic, memory, and packaging in under one roof in one building.

I’m just gonna come right out and say it. Elon, you are slightly too obsessed with the virtues of having everything under the one roof, in the one building. It’s probably not gonna all that amazing in the end tbh.

That’s about the fastest I could possibly imagine doing recursive research and development and being able to try out some pretty radical ideas, some of which have, you know, it’s kind of long shot stuff, but if some of these long shots pan out, it would be radical improvements in the way chips work.

I get it, long shot stuff is your thing. You go Elon!

Don’t forget to tune in tomorrow am for Intel’s earnings. Full transcript summary below the fold. Note the transcript was generated automatically by our Research Agent.