Musk’s Terafab Fever Dream Exposes Reality of the AI Chip Crunch

When Elon Musk took the stage on Saturday to unveil his plans to get into semiconductor production, he didn’t spare the superlatives.

“I have an important announcement to make, which is the most epic chip-building exercise in history by far,” he said before a small crowd in Austin, Texas. “This is really going to take things to the next level, a level probably people aren’t even contemplating right now. We’re going to adjust the context by a few orders of magnitude here.”

No one has ever proposed anything quite like what Musk calls Terafab. The project, as outlined, would be ...