Tesla and Musk companies plan chip production
Elon Musk announced the project, dubbed ‘Terafab’, on Saturday in Austin and on his online platform X. The facility is to be built on the north campus of Tesla’s Gigafactory in Austin, Texas. According to Musk, the target is a total computing capacity of one terawatt per year. One plant is set to produce semiconductors for vehicles and humanoid robots, while a second will focus on data centres for artificial intelligence applications in space.
“Terafab will technically be two fabs, each making only one chip design,” Musk clarified.
The new space chips will need to be designed for more extreme environments and higher temperatures. The megaproject is deemed necessary because current global chip production will only meet a fraction of his companies’ future demand. Musk put it bluntly: “We either build the Terafab or we don’t have the chips.”
With a target of one terawatt per year, Musk’s companies are aiming for an immense output. For context: the entire US currently produces around half a terawatt annually. Another comparison: at full capacity, Musk’s target would equate to roughly 70% of TSMC’s entire current global production—all at a single site, as highlighted by the portal Electrek. TSMC is widely regarded as the world’s largest chip manufacturer.
According to Electrek, the project is expected to cost between 20 and 25 billion dollars. Terafab is structured as a joint venture between Tesla, SpaceX, and xAI—Musk’s AI company, which SpaceX recently acquired through a stock swap. The facility will integrate all stages of semiconductor production under one roof: chip design, lithography, manufacturing, memory production, advanced packaging, and testing.
In the automotive sector, the chips will be used in Tesla’s ‘Full Self-Driving’ software and the Cybercab robotaxi programme. Until now, Tesla and Musk’s other companies have sourced their chips from suppliers such as Samsung, TSMC, and Micron.
However, during his presentation in Austin, Musk emphasised that the megaproject is primarily intended to support his vision of space-based computing. He stated that 80% of Terafab’s computing capacity will be dedicated to space-based AI satellites in orbit, while only 20% is earmarked for ground-based applications.
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