The modern world runs on chips. From our daily-use gadgets like smartphones to satellites orbiting the earth, everything depends on them. Yet semiconductor manufacturing remains one of the most complex and tightly controlled industries. Elon Musk and his companies are planning to change that.
In a recent livestream, Musk introduced TERAFAB. It’s a joint project by Tesla, SpaceX and xAI. The goal is to produce the chips his companies will need in the future.
Today, the global chip industry is dominated by a small group of companies. TSMC leads advanced chip production, while Samsung Electronics and Intel remain key players. Firms like ASML handle critical equipment to make the supply chain highly difficult to break into.
Tesla itself also depends on these companies. But Musk believes the industry is moving too slowly to meet the growing demand for AI, robotics and space technology. TERAFAB is his answer to that gap.
The idea is to bring the entire chip-making process into one place. Chip design, memory production, fabrication, packaging and testing all would happen under one roof. In today’s industry, these steps are often spread across different companies and countries. But Musk is planning the facility under one roof in Texas, near Tesla’s existing base. He believes this setup will reduce delays and speed up innovation.
TERAFAB aims to support one terawatt of computing power each year. That is many times larger than the combined output of today’s most advanced semiconductor facilities. The project could cost up to $25 billion, not including the year of planning and supply chain building required.
Two types of chips are planned. One will power Tesla’s self-driving systems, robotaxis and humanoid robots. Another chip called D3 will be built for space. It will be designed to handle extreme heat and radiation. “Most of the output could even be used beyond Earth,” Musk suggested.
The plan reflects one of the biggest shifts in the chip industry. With rising demand for computing power, companies are no longer relying on others. Musk’s message has made it clear that if the chips are not available, build them yourself.
