Elon Musk Unveils Ambitious Chip Manufacturing Plans for SpaceX and Tesla

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Elon Musk recently outlined plans for a chip-building collaboration between his companies Tesla and SpaceX, dubbed the 'Terafab' facility. Musk says the goal is to manufacture chips that can support 100 to 200 gigawatts of computing power per year on Earth, along with a terawatt in space. However, Musk does not have a background in semiconductor manufacturing and has a history of overpromising on goals and timelines.

Why it matters

Musk's announcement highlights the growing demand for advanced semiconductors to power the AI and robotics needs of major tech companies. As traditional chipmakers struggle to keep up, Musk is taking matters into his own hands by building a vertically integrated chip manufacturing facility to serve Tesla and SpaceX's specific requirements.

The details

Musk shared his plans for the 'Terafab' facility at an event in downtown Austin, Texas, near Tesla's headquarters and 'gigafactory'. He said the goal is to produce chips that can support 100 to 200 gigawatts of computing power per year on Earth, along with a terawatt in space. Musk cited the inability of semiconductor manufacturers to make chips quickly enough as the driving force behind this project, stating 'We either build the Terafab or we don't have the chips, and we need the chips, so we build the Terafab.'

• Musk shared his plans for the 'Terafab' facility on Saturday night (March 22, 2026).

What they’re saying

What’s next

Musk did not provide a timeline for when the 'Terafab' facility will be operational, but the project represents a significant vertical integration effort as Tesla and SpaceX seek to secure their own advanced chip supply.