4 min learnNew DelhiUp to date: Mar 23, 2026 08:53 PM IST
Elon Musk has unveiled plans to construct a large chip fabrication facility in the US, geared toward producing in-house semiconductors to energy the substitute intelligence (AI), robotics, autonomy, and orbital knowledge centre ambitions of his firms, together with Tesla and xAI.
Musk’s so-called ‘Terafab’ facility shall be positioned close to Tesla’s current headquarters and gigafactory in Austin, Texas. It will likely be collectively run by Tesla and SpaceX, each firms with Musk as CEO. The tech billionaire stated that the “superior know-how fab” may have all of the tools essential to manufacture and check chips of any variety, in keeping with a report by Bloomberg.
The Terafab facility is predicted to ultimately result in a terawatt of computing energy per yr whilst Musk ramps up investments in AI and robotics.
Whereas Musk’s newly unveiled tasks have constantly been met with some skepticism, owing partly to his historical past of over-promising on targets and timelines, his chip manufacturing efforts appear to be grounded in business observe. Regardless of chip partnerships and provide offers, Musk has stated that the semiconductor business isn’t transferring quick sufficient to satisfy the surging demand majorly from Tesla which is doubling down on robotics, autonomous driving, and AI.
“That price is way lower than we’d like. We both construct the Terafab or we don’t have the chips, and we want the chips, so we construct the Terafab,” Musk was quoted as saying.
Tech business executives have expressed related considerations a few scarcity of chips amid the race to construct computing energy for AI. Nonetheless, not all firms can pursue semiconductor fabrication as such amenities usually require billions of {dollars} in funding and extremely superior tools sourced from a number of suppliers. Whether or not Tesla, together with SpaceX, can execute such an endeavor stays the important thing query.
The EV big’s current suppliers embody TSMC and Micron. It additionally has an settlement with Samsung for its chips to be produced on the South Korean big’s facility close to Austin.
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Terafab chip plans
The upcoming Terafab will reportedly produce 2-nanometre chips. The power is predicted to help 100 to 200 gigawatts a yr of computing energy on Earth and a terawatt in area. Terafab shall be used to make two varieties of chips: One that’s optimised for edge and inference. These chips might be utilized in Tesla’s robotaxis and Optimus humanoid robots.
The opposite sort shall be high-power chips designed for use in orbital knowledge centres by SpaceX and xAI, which is now a completely owned subsidiary of SpaceX. The overwhelming majority of chips shall be utilized by xAI, in keeping with Musk, who didn’t present timelines for when the ability shall be constructed and start manufacturing.
Orbital knowledge centres
Musk’s plans for orbital knowledge centres will begin with a future ‘mini’ AI knowledge centre satellite tv for pc with the capability to ship 100 kilowatts of computing energy. This mini knowledge centre is only one piece of a a lot bigger community of orbital knowledge centres, every of which might be scaled to megawatt-range of computing energy, in keeping with the tech CEO.
He additionally reportedly needs to launch satellites from the floor of the Moon, as a part of his loftier imaginative and prescient for a future stuffed with “superb abundance”.
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In January this yr, Musk approached the US Federal Communications Fee (FCC) for a licence to launch a million knowledge centre satellites into orbit round Earth. The proposal has confronted opposition from Amazon’s Leo satellite tv for pc division.
Orbital knowledge centres are additionally a vital a part of SpaceX’s deliberate IPO, with the corporate anticipated to boost as a lot as $50 billion at a valuation of greater than $1.75 trillion, as per Bloomberg.