Elon Musk is warning the United States must dramatically expand domestic semiconductor manufacturing to safeguard its lead in artificial intelligence. Speaking with Senator Ted Cruz in March 2025, Musk highlighted a critical vulnerability: nearly all advanced AI chips are produced by one company, TSMC, in Taiwan. A Chinese invasion would sever the global supply of chips essential for AI, cloud computing, and autonomous vehicles.
Musk noted the US will likely lead AI for the next few years, but that leadership depends on controlling chip fabrication. Tesla has reportedly signed a $16.5 billion contract with Samsung to produce its AI5 and AI6 chips at Texas facilities. Meanwhile, Musk's xAI has joined consortia with Microsoft and BlackRock to strengthen domestic AI infrastructure, aligning with the CHIPS and Science Act that has spurred billions in investments from Intel, TSMC, and Samsung.
Musk also flagged a coming bottleneck: electrical power. While chip production capacity is growing exponentially, he warned the US may soon produce more AI chips than it can power, potentially facing a chip-rich, power-poor scenario in 2026.