What is Tesla's 'Terafab' and how much will it actually cost?

Tematica Research CIO Chris Versace joins Yahoo Finance Senior Autos Reporter Pras Subramanian and Market Domination Host Josh Lipton to discuss Tesla (TSLA) and SpaceX's (SPAX.PVT) recently announced project, the "Terafab" chip production plant.

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Terafab is planned as a 200,000-square-foot facility capable of 12-inch wafer processing at sub-10nm nodes. Key technical elements include: Cleanroom Environment: ISO Class 1 to Class 5 cleanrooms with humidity, temperature, and particle control maintained within ±0.1°C and ±1% RH to ensure process consistency. Process Technology: Advanced EUV lithography machines from ASML targeting 5nm and 3nm logic processes, coupled with deposition and etch modules from Applied Materials and Lam Research.

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El anuncio se realizó mediante una retransmisión en directo desde la antigua central eléctrica Seaholm en el centro de Austin. "O construimos el TeraFab, o no tenemos los chips, y necesitamos los chips, así que vamos a construir el TeraFab", dijo Musk. La instalación se construirá en el campus de Tesla, en el este del condado de Travis.

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Then came the announcement of a joint TERAFAB facility in Austin, Texas: two advanced chip factories, one dedicated to Tesla’s AI needs for vehicles and Optimus robots, the other targeting space-based data centers.

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SK Hynix plans to spend $7.9 billion on EUV lithography tools from ASML through 2027, one of the largest orders of its kind. Musk’s Terafab has launched a talent war in Taiwan, recruiting senior chip engineers with its 2-nm fab plan targeting TSMC.

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Teaming up his three flagship companies, Tesla, SpaceX, and xAI, Musk introduced the launch of the Terafab initiative. Described as a joint venture, it aspires to create what he calls “the largest chip manufacturing facility ever built.”

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He said he has urged suppliers including TSMC, Samsung Electronics Co. (005930.KS) and Micron Technology Inc. (MU) to expand as quickly as they can — and promised to take pretty much everything they make. “We will buy all of their chips; I have said these exact words to them,” he said. But semiconductor companies have opted to expand at a more measured rate, one far short of what he thinks necessary for Tesla, SpaceX and xAI. “So we either build the Terafab or we don’t have the chips,” he said.

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In the wake of increasing global tensions over tech supply chains, Terafab's domestic focus aligns with U.S. policies aimed at reducing reliance on foreign chip manufacturers like TSMC and Samsung. These steps may bolster national security by safeguarding American technological interests and enabling the country to maintain an edge in AI and space exploration technologies under the umbrella of the CHIPS Act as reported by TechCrunch.

Musk’s ‘Terafab’ Moonshot: Can He Build the World’s Most Advanced Chip Factory From Scratch?

The specialized machines needed for advanced chip production, such as the extreme ultraviolet (EUV) lithography tools made exclusively by ASML, have multi-year waiting lists. Securing even a handful of these machines would require displacing orders from companies that have been planning their roadmaps for a decade. Musk’s vision for the Terafab extends far beyond powering electric vehicles.

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On March 21, Elon Musk walked into a defunct power plant in Austin and announced Terafab: a $20 to $25 billion joint chip fabrication facility between Tesla, SpaceX, and xAI, targeting one terawatt of annual AI computing power, produced at ...