Elon Musk has raised concerns over what he sees as one of the United States’ biggest vulnerabilities in the global artificial intelligence race — the country’s heavy reliance on Taiwan for advanced AI chips.
Speaking during a podcast with US Senator Ted Cruz on March 17, 2025, Musk warned that most advanced AI chips are currently manufactured in Taiwan, making global supply chains highly exposed to geopolitical risks involving China and Taiwan.
He said a potential Chinese invasion of Taiwan could severely disrupt global access to the semiconductors powering modern artificial intelligence systems.
Taiwan remains central to AI chip production
Taiwan Semiconductor Manufacturing Company, commonly known as TSMC, continues to dominate the production of advanced semiconductors worldwide.
During the podcast, Musk claimed TSMC currently manufactures virtually all advanced AI chips used globally.
‘Right now, almost all the advanced AI chips are made in Taiwan,’ Musk said.
He added that if China were to invade Taiwan, the world could lose access to critical AI chips, stressing that the United States must expand domestic chip manufacturing capabilities for national security reasons.
Tesla expands US chip manufacturing ambitions
Musk said Tesla is not only highlighting the issue but is also taking steps to strengthen domestic production capacity.
Around March 2026, Tesla announced its ‘Terafab’ project in Austin, Texas, aimed at boosting AI chip manufacturing capabilities in the United States.
Tesla is working with Samsung, which operates a semiconductor fabrication facility in Taylor, Texas. The Samsung plant is expected to become Tesla’s first AI chip production site, with initial output targeted for 2027.
At the same time, Tesla continues working with TSMC while also exploring potential partnerships with Intel as part of a broader strategy involving multiple chip manufacturers.
Investors closely watching semiconductor competition
The growing strategic importance of AI chips was further highlighted during a summit in May 2026 involving Donald Trump, Xi Jinping, Musk and Nvidia chief executive Jensen Huang.
The meeting reflected how closely AI chip policies are now tied to broader US-China diplomatic relations.
For investors, competition among TSMC, Samsung and Intel is becoming increasingly significant as governments and companies seek to reduce supply chain risks and expand US-based semiconductor production.
Samsung’s Taylor facility and Intel’s domestic expansion efforts are seen as key developments in that strategy.
Tesla is targeting 2027 for the start of AI chip production at Samsung’s Texas facility, while TSMC’s Arizona plant has reportedly faced delays and workforce-related challenges.
The delays continue to underline concerns over global dependence on Taiwan’s semiconductor industry, with the associated geopolitical risks expected to remain a major issue for the foreseeable future.
