Elon Musk is truly the Nikola Tesla of our times.
On Saturday, Elon Musk announced his plan to create Terafab.
So what is it?
The Terafab is Musk’s semiconductor fabrication facility that will be used to create AI chips for Teslas, robots and other electronic and mechanical devices that use AI chips.
The move by Musk is historic, considering the U.S. currently relies predominantly on Taiwan for its semiconductor chips.
KXAN Austin reported more on Musk’s historic plans:
Elon Musk announced late Saturday inside the Seaholm Power Plant that his much-anticipated $20 billion Terafab will be built here in Austin. It ends a week of speculation after the billionaire SpaceX and Tesla Inc. founder teased the project in an announcement on his social media platform X.
Musk said the fabrication plant – a joint venture between Tesla, SpaceX and X parent company XAi – will be built on the Tesla campus in eastern Travis County. The “Terafab” will result in the production of 1 terawatt of compute annually. That’s about 100 million to 200 million artificial intelligence chips, which will be used to power Musk’s products, from his self-driving vehicles to his Optimus humanoid robots to rockets – and eventually advance Musk’s ultimate goal of multi-planet civilization.
He said all the current fabrication facilities on Earth only produce about 2% of what he would need across all of these projects.
And while he credited current chip suppliers, which will soon include Samsung Electronics Co. Ltd. in Taylor, they are not growing at a rate fast enough. That means they won’t have the chips if they don’t build the Terafab – “so we’re gonna build Terafab,” Musk quipped to the audience, which included Texas Gov. Greg Abbott.
Take a look:
SpaceXAI + Tesla TERAFAB Project
Goal is a trillion watts of compute/year
Most must necessarily go to space, as US electricity is only 0.5TW https://t.co/hMtg9vNLcw
— Elon Musk (@elonmusk) March 22, 2026
Announcing TERAFAB: the next step towards becoming a galactic civilization https://t.co/xTA70LOU0e
— SpaceX (@SpaceX) March 22, 2026
Terafab was the final missing piece of the puzzle https://t.co/aBoQpq2urd
— Elon Musk (@elonmusk) March 22, 2026
Business Insider reported more on Musk’s plans:
Musk said the Terafab will be a comprehensive plant that will have all the necessary equipment to test, revise, and manufacture the chip.
The CEO is essentially proposing to put some of the validation stages of chip development that are typically done outside a fab plant under one roof.
“To the best of my knowledge, this doesn’t exist anywhere in the world where you’ve got everything necessary to build logic, memory, and do packaging, and test it, and then do masks, improve the masks, and keep looping it,” Musk said.
There will be two kinds of chips the Terafab will make, according to Musk.
One will be designed primarily for Optimus and Tesla’s vehicles, which are being built and trained to be fully autonomous. Musk said the chip will “especially” be for Optimus because he expects the volume of units to be 10 to 100 times more than the volume of cars.
The other chip, called D3, will be specialized for space environments. The CEO said he expects most of the data centers to be housed in lower orbit, requiring the need for a solar-powered AI satellite.
Musk said the cost of deploying AI in space will drop “below the cost of terrestrial AI” in part because space is always sunny, giving way to more power.
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