Elon Musk Wants New Chip Facility for Tesla and SpaceX

Elon Musk has laid out plans for a chip manufacturing project involving Tesla and SpaceX. The proposed facility, called Terafab, would be built near Tesla operations in Austin and is aimed at meeting internal demand for AI and robotics chips.

Good to Know

• Musk said chip supply is not keeping pace with demand from Tesla and SpaceX.
• The proposed Terafab site would be near Tesla headquarters and the Austin gigafactory.
• Musk gave no timeline for the project during the Austin event.

Musk Wants Direct Control of Chip Supply

Rather than wait on outside semiconductor suppliers, Elon Musk says Tesla and SpaceX may need to build their own answer. Speaking at an event in downtown Austin on Saturday night, Musk said current chip makers are not producing fast enough for the needs of artificial intelligence and robotics across his companies.

“We either build the Terafab or we don’t have the chips, and we need the chips, so we build the Terafab.”

A photo shown during the event suggested the site would sit close to Tesla headquarters and the company gigafactory in Austin. That location would place the project next to one of the main centers of Tesla manufacturing, while also tying it closely to broader work in AI, automation, and robotics.

Musk described a very large target for output. He said the plan is to produce chips that can support 100 to 200 gigawatts of computing power per year on Earth, along with a terawatt in space. He did not explain when the project could start or how long construction and production setup might take.

That missing timeline matters because semiconductor manufacturing is one of the most difficult industrial businesses to execute. Chip fabrication requires deep engineering experience, long build cycles, complex supply chains, and major capital spending. Musk is well known for setting very aggressive goals, and Bloomberg pointed out that he does not come from a semiconductor manufacturing background.

Even so, the logic behind the proposal is easy to follow. Tesla is pushing deeper into AI and robotics, while SpaceX also needs more computing power for advanced systems. If outside supply stays tight, an in-house or tightly controlled chip operation could give Musk more certainty over one of the most important parts of that technology stack.