Musk announces ‘Terafab’ plan to address chip shortage for Tesla, SpaceX

Elon Musk has announced plans for a major chip manufacturing initiative involving Tesla and SpaceX, aimed at meeting the growing demand for semiconductors across his companies.

According to Bloomberg, Musk unveiled the proposal on Sunday at an event in downtown Austin, Texas, indicating that the proposed facility—dubbed “Terafab”—would be located near Tesla’s headquarters and Gigafactory in the city.

Musk said the move was driven by supply constraints, arguing that existing semiconductor manufacturers were unable to meet the scale and speed required for Tesla’s artificial intelligence systems and SpaceX’s robotics ambitions. “We will build Terafab or we won’t have the chips,” he said.

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The project is designed to produce chips capable of supporting between 100 and 200 gigawatts of computing power annually on Earth, with an additional target of up to one terawatt in space. He did not give a timeline for execution.

While the plan underscores Musk’s push for greater vertical integration, Bloomberg noted that he has no direct experience in semiconductor manufacturing and previously faced intense scrutiny over ambitious targets that fell short of expected timelines.