Terafab

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Planned semiconductor fabrication plant

Terafab

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IndustrySemiconductor industry
ProductsArtificial intelligence hardware
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Terafab is a planned semiconductor fabrication plant jointly developed by Tesla, xAI, xAI's parent company SpaceX, and Intel.[1][2] The venture was announced by Elon Musk on 21 March 2026 and centers on the construction of a vertically integrated large-scale facility designed to produce more than one terawatt (one trillion watts) of artificial intelligence (AI) compute capacity per year. It aims to consolidate every stage of the semiconductor device production process, including chip design, fabrication (including lithography), memory production, advanced packaging, and testing to produce integrated circuits, memory modules and multi-chip modules under one roof.

Initial prototype fab operations are to be focused in Austin, Texas, with a total cost expected in the range of US$20−25 billion.[3][2][1][4] The full-scale Terafab is to be built at a yet to be determined location. Analysts estimate the costs for the full-scale facility at around US$5 trillion.[5]

AI chips for Tesla Autopilot are among the products planned for manufacture at Terafab.

The project was first teased by Musk in early 2026 and officially announced on 21 March 2026 during a special event at the defunct Seaholm Power Plant in Austin, Texas.[4] Musk described Terafab as a pivotal step toward humanity becoming a galactic civilization, with the announcement accompanied by a live SpaceX broadcast on X and conceptual imagery of prototype 100 kW "AI Mini Sat."[2] He went on to describe that the global chip industry cannot expand quickly enough to meet the demand that Tesla will need for "edge inference compute" for Tesla vehicle and Optimus humanoid robot production, nor for the special semiconductor characteristics required for orbital AI infrastructure. Musk claimed all the current fabrication facilities on Earth produce only about 2% of what Tesla and SpaceX will need across all projects,[4] saying "We either build the Terafab, or we don't have the chips, and we need the chips, so we build the Terafab."[3] The project integrates efforts under the SpaceX/xAI umbrella with Tesla's existing silicon development.

On 7 April 2026, Intel announced it would join the Terafab project to contribute manufacturing expertise.[5] As of 2026, Intel is one of three manufacturers worldwide who are producing sub-5 nm chips at scale, the other two being TSMC and Samsung Electronics.

Prototype fabrication facility

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Tesla plans to build a prototype "Advanced Technology Fabrication" facility at the existing Tesla GigaTexas site that will be capable of producing each of the parts of chip manufacturing in one facility in order to iterate rapidly—"make a chip, test it, revise the mask, and repeat without shipping wafers between sites"—a capability that does not currently exist in any other chip fab site globally. The aim is to manufacture chips for both AI edge inference and for AI model training with chips optimized for operation in space.[3]

The project targets 2-nanometer process technology and an initial output of 100,000 wafer starts per month.[4] Tesla's fifth-generation AI chip, AI5, is among the first products the pilot facility will be designed to produce, with small-batch production anticipated in 2026 and volume production in 2027.[6] On April 23, 2026, Elon Musk announced the intention to use Intel's 14 angstrom technology at Terafab.[7]

Musk said the long term goal is to have 1 million wafer starts per month and produce between 100 and 200 billion custom AI and memory chips per year in the full scale facility.[4]

  1. ^ a b "Why Tesla's Terafab Might Be Elon Musk's Biggest Challenge Yet". Business Insider. 21 March 2026.
  2. ^ a b c "SpaceX Terafab announcement". SpaceX. 21 March 2026.
  3. ^ a b c "Elon Musk unveils $20 billion 'TeraFab' chip project to make chips, memory, and package processors all under one roof — targets a terawatt of annual compute". Tom's Hardware. 22 March 2026. Retrieved 22 March 2026.
  4. ^ a b c d e Lambert, Fred (22 March 2026). "Tesla and SpaceX announce $25B 'Terafab' chip factory — here's why it reeks of desperation". Electrek. Retrieved 22 March 2026.
  5. ^ a b Sophia, Deborah Mary (7 April 2026). "Intel joins Musk's Terafab AI chip project to power humanoid, data center goals". Reuters. Retrieved 8 April 2026.
  6. ^ Mazza, Rosalia (14 March 2026). "Tesla Terafab Project: Elon Musk Confirms Launch in Seven Days". Fintech Weekly. Retrieved 24 March 2026.
  7. ^ "Elon Musk lays out Terafab AI chip project plan". Reuters.com. Reuters. April 23, 2026. Retrieved April 23, 2026.