Musk announces plans for SpaceX and Tesla to establish cutting-edge ‘Terafab’ chip manufacturing facilities in Austin.

SpaceX and Tesla will establish two state-of-the-art chip manufacturing plants at a large facility in Austin, Texas. One will be dedicated to powering vehicles and humanoid robots, while the other will be focused on artificial intelligence data centers in space, stated CEO Elon Musk on Sunday.

This announcement followed Musk’s earlier proclamation about the plans for “Terafab,” a cutting-edge AI chip complex in Austin.

“Terafab will essentially be two fabs, each producing a single chip design,” Musk mentioned in a post on X.
Previously, Musk indicated that Tesla needed to create its own AI chip factory, but the role of SpaceX had not been revealed until now. SpaceX, which is gearing up for a public offering that may value the company at approximately $1.75 trillion, recently merged with Musk’s social media and AI company, xAI.

TERAFAB: the next step to becoming a galactic civilization

Alongside @SpaceX & @xAI, we are constructing the largest chip manufacturing facility ever (1TW/year) – merging logic, memory & advanced packaging all in one locale.

To harness maximum energy from the Sun, we… https://t.co/QYfGR8XsJx

— Tesla (@Tesla) March 22, 2026

“We must build the Terafab, or we won’t have the chips,” Musk asserted during a presentation at an Austin facility on Saturday, noting that current global chip production would satisfy only a small portion of his company’s future demands.

Musk refrained from providing a timeline for the new initiative. While Musk is known for proposing highly ambitious projects, many have encountered delays or setbacks.

Musk expressed gratitude to existing chip suppliers like Samsung, TSMC, and Micron but asserted that demand from his firms would ultimately surpass total global chip production.

Terafab is projected to yield one terawatt of computing capacity annually, compared to about half a terawatt currently produced across the United States, Musk stated.

One chip will be utilized in Tesla vehicles and Optimus humanoid robots, while the other will be tailored for AI satellites in space.
“We require a high-powered chip specifically engineered for space that accommodates the more extreme conditions,” Musk remarked, adding that it must function at elevated temperatures.