Elon Musk has unveiled a joint venture between Tesla and SpaceX to build what he says will be the world’s largest chip manufacturing facility.
The project, called TeraFab, is expected to cost at least $20 billion and aims to produce up to 50 times more AI chips than current global output.
Construction will begin at Tesla’s headquarters in Austin, Texas, where the facility will manufacture two types of chips: one for Tesla’s self-driving systems, robotaxis, and Optimus robots, and another designed to operate in space environments.
Musk has previously outlined plans to move AI data centers into low-Earth orbit, arguing they could be cheaper and more efficient than those on Earth. Speaking earlier this year at the World Economic Forum in Davos, he said space could become the lowest-cost location for AI infrastructure within two to three years.
SpaceX has already filed proposals with the US Federal Communications Commission to develop a satellite-based data center network. Meanwhile, Nvidia CEO Jensen Huang has introduced a similar initiative, and Jeff Bezos has suggested orbital data centers could help address Earth’s growing energy demands.
Announcing TeraFab, Musk said the project is part of a broader vision to expand humanity’s understanding of the universe and push technological boundaries.
He has set an aggressive timeline, with initial production expected next year and full-scale manufacturing by 2028—faster than the typical three-year setup period for semiconductor facilities.