Elon Musk Launches Terafab: A Groundbreaking $25B Chip Manufacturing Venture in Texas
Elon Musk has unveiled an ambitious $20-25 billion semiconductor manufacturing venture, Terafab, on March 22, 2026. This groundbreaking project is a collaboration between Tesla, SpaceX, and xAI, aiming to construct what Musk refers to as “the largest chip manufacturing facility ever.”
Addressing the audience at the now-defunct Seaholm Power Plant in Austin, Texas, Musk portrayed Terafab as “the most epic chip building exercise in history by far.” The project’s goal is to generate one terawatt of computing power annually, significantly surpassing the current global output of approximately 20 gigawatts per year from all semiconductor manufacturers combined.
The facility will unify every phase of semiconductor production under one roof, encompassing chip design, lithography, fabrication, memory production, advanced packaging, and testing. The initial prototype operations will be established in Austin, with the full-scale facility’s location still to be decided. This location will require thousands of acres and over 10 gigawatts of power.
Musk highlighted that existing chip suppliers like TSMC, Samsung, and Micron produce only about 2% of what his companies will require for future AI computing demands. Terafab plans to manufacture two distinct chip families: terrestrial chips for Tesla’s Full Self-Driving system, Cybercab robotaxis, and Optimus humanoid robots, as well as high-powered chips engineered for the harsh environment of space to power AI satellites and orbital computing infrastructure.
The project is targeting 2-nanometer process technology with an initial output of 100,000 wafers per month. Small-batch production of Tesla’s fifth-generation AI chip, AI5, is anticipated in late 2026, with volume production projected for 2027.
Source: CBS News