We can say that Elon Musk is determined to produce custom chips. Because, in our view, with the US-China tensions under Donald Trump and the retaliatory tariffs against China, a ‘Chip America’ crisis has become an inevitable situation. Elon Musk will be the most affected by this situation, as chips are a priority in smart vehicles like Tesla, and producing them cheaply is an advantage.
Anticipating the effects of this situation, Elon Musk is moving towards producing his own custom chips. However, while chips and many hardware components can be produced much cheaper in China, if Elon Musk succeeds, it means that prices will become even more expensive in the future.
Elon Musk stated that he needs to build his own chip factory in line with artificial intelligence technology and Tesla’s robotic goals. It is said that there might be a collaboration with Intel on this path. However, everything can change. You might see China and America reconcile their relations again, and then the China route would be open once more. In our opinion, this is now the least likely scenario.
What Happens If Elon Musk Succeeds in Producing Custom Chips?
If Elon Musk succeeds in producing his own chips, and he will. However, if he can truly ensure a price balance policy in the market, then he will have created a revolution from his own perspective. A chip is something present everywhere in your life. It could be a phone, a computer, smart home appliances, a watch, your automobiles, and many other things, containing chips you may or may not be aware of.
To explain a chip simply, you might ask, ‘What is a chip, anyway? It just produces things.’ In that case, let’s explain the situation: you can think of a chip as the human brain; producing this brain is not so simple, it contains data from the latest technology. And if you succeed in this, then you look at the position of the successful product relative to its competitor – has it caught up, surpassed, or remained in balance? Let’s say you’ve achieved that too. This is the most critical point: how much does your competitor produce your successful product for, and how much did you produce it for? For example, if your competitor produces it for $100 and you produce it for $400, then even if you succeed, you ultimately remain unsuccessful.
So, if Elon Musk truly succeeds in chip production, can he break away from China in manufacturing and declare his own independence? What do you think about this?
