Elon Musk's New Ambition: Producing Own Chips Through Terafab in Texas

Elon Musk has stated that SpaceX and Tesla plan to build two advanced chip factories in the Austin area, Texas, United States. These facilities will be used to support the production of vehicles, humanoid robots, and artificial intelligence (AI) data centres in space. The plan emerged after Musk announced the AI chip complex project named “Terafab” in Austin the previous day. Quoted from Reuters on Monday (23/3/2026), Terafab will consist of two fabs, each producing only one type of chip. Previously, the world’s richest person had mentioned that Tesla needs to build its own AI chip factory. However, SpaceX’s involvement in this project has only now been revealed. SpaceX itself is preparing to go public, with an estimated valuation of around $1.75 trillion after merging with Musk’s social media and AI company, xAI. In a presentation in Austin on Saturday (21/3/2026), Elon Musk emphasised that building Terafab is an urgent necessity. “We must build Terafab, or we won’t have chips,” he said. Nevertheless, Elon Musk has not disclosed a definite schedule for the project’s realisation. He is known for frequently announcing ambitious projects, some of which experience delays or fail to materialise. Musk also expressed appreciation to current chip suppliers such as Samsung, TSMC, and Micron. However, he assessed that demand from his companies will ultimately exceed total global chip production. This figure is far greater than the current total capacity in the United States, which is around half a terawatt. He explained that one chip will be used for Tesla vehicles and the Optimus humanoid robot, while the other is specifically designed for AI satellites in space. “We need high-power chips designed for more extreme space environments,” Musk said. He added that the chips must be able to operate at higher temperatures.