Musk revealed that upon completion, about 80% of the factory’s capacity will be dedicated to space-related applications, with the remaining 20% for terrestrial uses. The project has been described as “one of the largest semiconductor manufacturing operations ever planned by a private company,” which will make Tesla one of the world’s largest semiconductor manufacturers, thereby eliminating reliance on TSMC, Samsung, or any external suppliers, and achieving full-stack control over the AI stack fr
Every 2nm fab needs extreme ultraviolet (EUV) lithography machines from ASML, the sole supplier on Earth. Each machine costs roughly $400 million. ASML’s production capacity is fully allocated to existing customers: TSMC, Samsung, Intel.
The Terafab project faces several monumental risks: The Physics of Lithography: Building a leading-edge fab (capable of 2nm or below) is arguably the most difficult engineering feat on Earth. TSMC and Samsung have spent decades and hundreds of billions of dollars to master this.
Terafab will be used to make two types of chips: One that is optimised for edge and inference. These chips could be used in Tesla’s robotaxis and Optimus humanoid robots. Also Read | Leadership exits, Grok controversy: Why Elon Musk wants xAI to start over again · The other type will be high-power chips designed to be used in orbital data centres by SpaceX and xAI, which is now a wholly owned subsidiary of SpaceX.
Through the new Terafab project, Musk will take AI computing into his own hands, with the aim of producing one terawatt of computing power a year, enough to power hundreds of millions of AI chips.
Moreover, this initiative also ties directly into political movements supporting domestic manufacturing as outlined in federal policies like the CHIPS Act, which seeks to bolster domestic semiconductor production through subsidies and incentives.
It sounds like an ambitious project, though not everyone is buying it. Musk has historically announced wild projects, like the "million-mile" battery that never quite got off the ground. Whether the Terafab facility actually becomes a reality is a waiting game for now.
Elon Musk took the stage over the weekend to announce a new partnership between Tesla, SpaceX and xAI to build a $25 billion chip-making factory in Austin, Texas, called Terafab.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry ... Ives calls Terafab the “first step” toward full operational integration.
The more speculative piece of the ... company understands heat rejection in space at a scale no one else does. The economics of launch are dropping....
Microsoft backed startup Lace is developing helium atom beam lithography, targeting chip features smaller than those produced by current equipment. These developments arrive at a time when ASML Holding (ENXTAM:ASML) maintains a central role ...
Elon Musk is planning a $20 billion semiconductor fabrication facility, known as the Terafab, which is set to significantly expand his companies’ industrial presence in Central Texas.
While the Terafab’s potential economic impact is undeniable – bringing thousands of high-skilled jobs and strengthening Texas’s growing semiconductor corridor alongside Samsung’s Taylor plant and TI’s Sherman facility – it may also place considerable strain on the state’s infrastructure.
In an X post, Tesla explained that Terafab will be the largest chip manufacturing facility ever, creating chips to power solar-powered AI satellites, millions of Tesla robots and launching "tons of mass into orbit." The company says they need more chips than what "all the chip manufacturers in the world combined can provide today, or even by 2030 (based on projected production growth)."
AUSTIN (Austin Business Journal) — Elon Musk announced late Saturday inside the Seaholm Power Plant that his much-anticipated $20 billion Terafab will be built here in Austin. It ends a week of speculation after the billionaire SpaceX and ...
Updated Tue, March 24, 2026 at 2:31 PM EDT · TSLA · -3.59% TSM · -6.22% 005930.KS · -0.22% 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.