Why Elon’s $25B Chip Fab TeraFab Is 'Not Real' and AI Layoffs Are an Excuse

Transcript

We've titled our next segment AI eats everything because what's going on is the tech titans continue to go allin on AI. So Elon Musk unveiled a project he's calling Terra Fab, which is a 25 billion chip fabrication facility in Austin, Texas, which is a joint venture between Tesla, SpaceX, and XAI. Um, he's targeting two nanometer process technology and he wants 80% of compute directed towards orbital AI satellites, 20% groundbased. No production timeline was given on that one. Uh, Jeff Bezos is raising a hundred billion for projects

to buy manufacturing companies and transform them with AI. The targets allegedly include semiconductors, aerospace, and defense. There have been meetings with Middle Eastern and Singaporean asset managers, excuse me, Mark Zuckerberg is building a personal AI CEO agent to bypass management layers at Meta, retrieving information that normally flow through multiple levels of employees. This is part of a broader push to make Meta's 78,000 person or quote AI native. And as a result, AI is eating jobs. It's evening jobs in crypto where there were major job cuts at Algarand, Gemini, Crypto.com, OP Labs,

PIP Labs, Misari, and more. Um, Gemini said AI is now too powerful not to use at Gemini and compared non-adoption to quote, "Showing up at work with a typewriter." Um, recruiter Dan Esco pushed back saying, "I see no real indication the layoffs have anything to do with AI workforce replacement at scale, but rather saying it's an excuse and sector contraction has been the problem with job postings having fallen 80% year-over-year to about 6.5 per day. So, where we are now is we have a lot of these things being discussed. We have AI being given as a

reason for many of the job cuts and we have people making these physical infrastructure bets. But I'll start with this one. So Elon Musk and Terra Fab, is this a real semiconductor strategy? Is this part of Elon's roll out for the SpaceX IPO? Like where on a scale of real to not real, where do we put this thing? >> I call [ __ ] The whole thing is [ __ ] Okay, so you need 20 to25 billion to start a fab. A fab is one of the most complex technologies human beings have ever created. Second to the pyramids, TSM has invested a hundred billions of dollars to figure this out.

Um Tesla doesn't have the cash flow either to pull this off. They uh have not figured this into their capex planning for next year too. They generate Tesla does about three to six billion dollars in free cash. There's a range there because their Tesla auto sales are dropping quite a bit. I like their products, bro. I think they're phenomenal products. So, I'm I'm a believer in autonomous driving. I believe Tesla's got the edge in the US. I'm calling a spade a spade here, but you need to finance investment with either operations or by diluting your shareholders. They're not going to sell 20 billion dollars on the market. Unlike uh Google, Tesla doesn't have a

alternative way to compete to get lower cost GPUs. So, I don't think this is going to go anywhere. Uh Elon is also the only one talking about data centers in space. I've listened to quite a few credible people say that it doesn't make any sense. The technology is not there. Jensen, the CEO of Nvidia himself, has said that, including people from semi analysis, which covers the category. So, it it seems like Elon's just trying to sell more of the future. Tesla stocks been down 25% in the last one or two months. I think I I had a short on it until this morning, by the way. I probably be short again after a rally.

So, full disclosure there. Uh, again, big believer in the technology, big believer in what Elon's done for human innovation, right? Uh but I I don't think this goes anywhere. It's not real. >> On the AI side, I feel like this whole I have to fire all these people uh because of AI. Um it's kind of just this um it gives companies an excuse to restructure um without having to like really explain the true reason why they're want to restructure. It has very little to do with AI. It's an opportunity uh and an excuse. That's just the truth. Um, and that's the case if your business model is not working. Uh, I'm not talking

about any of those companies in specific, but you can say, "Oh, AI is coming. I'm going to fire my workforce and restructure, right? It's just very clean. It's it's a beautiful excuse." Um, I think that no surprise to anyone on this call, this opportunity really tells me why I'm so excited about crypto. uh all this noise, all this chasing the hot new toy. And we'll get into Elon here in a second, but I I literally just came back from downtown in New York City where the CTO of DTCC was talking about how they're going to tokenize $200 trillion in assets. Like, come on. Um and and that's happening in real time.

We have D in New York this week. Every institutional is piling in. I could sense the energy in the room that standing room only, right? And so like this makes me more excited to to be part of crypto which is going to be totally integrated with AI going forward in whatever way shape and form it takes. Um I think Rahm it's hard to bet bet against Elon over the years. Maybe you can do it on in a very you know different I guess windows perhaps and make money but I mean this is the greatest entrepreneur and founder you know of within generations. Um, so I love the fact that he's thinking big. As I as I watched his presentation over the weekend, there's a couple other cool like little Easter eggs that jumped out

at me talking about how he's going to how he's how he thinks that new breakthroughs in physics are going to unlock other things. He said quantum without saying quantum. And so those are the three technologies that I that I think about, AI, crypto, and then quantum. It sounds like he's starting to get his hand on the quantum side as well. Um, you know, where do we go from here? It's also very much part of what we talked about previously, onshoring, onshoring, building chip capabilities on shore, resiliency. You know, is this our 1970s moment for for energy? Uh, maybe we we need to onshore chips. Um, and and if if Elon's going to do it, if who else is if it's not him? So, um, too early to tell if he's going to be successful or

not. um for me gets me very excited about um so many different things, so many different breakthroughs. There's going to be when you put all this money at AI that we're seeing, there's going to be innovations and breakthroughs that are going to like that are going to be second derivative and be incredible. Um that's what I'm looking for. Hopefully some amazing startup founders come out of it. Um but again, I like this is a crypto and macro show. I get excited about crypto more and more I hear about all this.