SpaceX and Tesla to Build Twin AI Chip Factories in Austin Under 'Terafab' Plan

SpaceX and Tesla are to build two advanced semiconductor factories at a large site in Austin, Texas, one producing chips for Tesla's cars and Optimus humanoid robots, and the other making chips for artificial intelligence (AI) data centres in orbit. Elon Musk revealed the plans on Sunday, a day after first announcing the project, which he has named "Terafab", news agency Reuters has reported.

"Terafab will technically be two fabs, each making only one chip design," Musk wrote on X. 

Musk had previously indicated that Tesla would eventually need its own chip manufacturing capability, but SpaceX's involvement in the project had not previously been made public. SpaceX, which is preparing for a stock market listing that could value it at around $1.75 trillion, recently merged with Musk's social media and AI venture xAI.

"We either build the Terafab or we don't have the chips," Musk said during a presentation at an Austin facility on Saturday, warning that current global chip output would satisfy only a small fraction of what his companies will require in the years ahead.

No timeline was given for the project. Musk has a history of setting out highly ambitious targets, though a number of his announced ventures have been delayed or quietly shelved.

Musk said he remained appreciative of existing chip suppliers, naming Samsung, TSMC and Micron by name, but argued that demand from his businesses would ultimately outstrip total worldwide chip production. 

He said Terafab would eventually generate one terawatt of computing capacity annually, compared with roughly half a terawatt currently produced across the entire United States.

One chip will go into Tesla vehicles and the Optimus robot, whilst the second will be engineered for AI satellites operating in space. 

"We need a high-powered chip designed for space that takes into account the harsher environment," Musk said, noting it would need to function reliably at elevated temperatures.