Elon Musk Unveils $25 Billion TeraFab Chip Manufacturing Project in Austin

Elon Musk has launched TeraFab, a $25 billion joint chip fabrication venture between Tesla, SpaceX, and xAI targeting one terawatt of AI compute annually. Taking the stage at Austin's defunct Seaholm Power Plant, Musk called the project "the most epic chip building exercise in history by far." The facility will consolidate every stage of semiconductor production under one roof, including chip design, lithography, fabrication, memory production, advanced packaging, and testing. The chips are expected to be built on a 2nm process, one of the most advanced manufacturing technologies. TeraFab will produce inference chips for Tesla vehicles and Optimus robots, plus D3 chips custom-designed for orbital AI satellites. Musk said 80% of TeraFab's compute output would be directed toward space-based orbital AI satellites. Neither Tesla nor SpaceX has prior experience operating a semiconductor fabrication facility.