Musk Enters Advanced Chips, Posing Major Threat to K-Semiconductors

Elon Musk, CEO of Tesla, has officially announced plans to build a massive factory called "Terafab" to directly produce artificial intelligence (AI) chips. "Terafab is the most magnificent semiconductor production project in history," Musk said Thursday. "It will elevate everything to a level people cannot even imagine."

Unlike the existing semiconductor ecosystem where design, manufacturing, and packaging are separated, his plan is to vertically integrate all these functions and serve as a "game changer." The planned wafer production capacity of 1 million units per month is approximately 10 times that of TSMC's gigafab in Taiwan. Musk plans to secure annual AI computing power of 100 million terawatts (TW) at Terafab — 50 times the current global AI computing capacity of 20 gigawatts.

Musk's Terafab declaration poses a formidable threat to Korean chipmakers including Samsung Electronics and SK hynix. A key customer for Korean semiconductors is now moving to produce advanced chips on its own. Moreover, the Donald Trump administration, which is waging an all-out campaign to build domestic supply chains, is highly likely to provide massive support. With Terafab set to focus on low-power inference chips for autonomous vehicles and humanoid robots, as well as high-performance AI chips for space environments, competition with Korean semiconductor companies over advanced chips has become inevitable. Musk has even singled out Korea specifically, sending recruitment overtures offering annual salaries of up to 300 million won ($220,000) along with stock compensation to attract talent.

Tesla is not the only force shaking K-semiconductors' stronghold. Taiwan's TSMC is building a second plant in Japan to produce 3-nanometer chips, steadily strengthening the semiconductor supply chain between the two countries. China has already narrowed the technology gap with Korea in legacy semiconductors of 10 nanometers and above to just two to three years.

The government must not rest on the laurels of the semiconductor "super boom." It should mount an all-out effort to ensure Korean companies maintain competitiveness armed with ultra-wide technology gaps. Immediate exemptions from the 52-hour workweek rule should be implemented, and a "package roadmap" covering talent development, power grid expansion, and cluster development must be drawn up without delay. Korea must not make the fatal mistake of being intoxicated by the sweetness of the current semiconductor export boom while overlooking the frightening reality closing in around its neck.