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However, when asked about the possibility of a merger during a Tesla earnings call last week, Musk said "as you can tell from all the many collaborations on so many fronts with SpaceX, there's more and more overlap. Especially with Terafab, that's really going to be a gigantic project."
Tesla also holds a stake in SpaceX, and the two companies are collaborating on a chip manufacturing initiative called Terafab.
Most notably, Musk also launched Terafab, a large semiconductor project in Texas. Terafab, which will eventually cost over $100 billion, is being developed by SpaceX and Tesla.
The strategic logic is straightforward: ... eliminate that dependency entirely by consolidating chip design, lithography, and packaging under one roof, targeting 2-nanometer process technology....
The region is home to about 180 companies in semiconductor-related industries with collectively about 60,000 employees, according to Opportunity Austin data. Samsung Electronics' new $17 billion Taylor semiconductor plant is expected to roll its first chips off the line by the end of the year. Elon Musk has also started construction on his Terafab chip-design facility outside of Austin.
He went further on Tesla’s second-quarter earnings call last week. Asked about a combination, Musk said there’s “more and more overlap, especially with Terafab,” before pulling back: “we can’t talk about combining companies.
“It is got to be done with the appropriate process,” Musk said, before handing over to Tesla’s chief legal officer, Brandon Ehrhart, who highlighted joint projects including the construction of a semiconductor plant known as Terafab.
General counsel Brandon Ehrhart ... described only “a general framework” for the Terafab chip venture, with specific projects subject to separate negotiations. Tesla‘s roughly $2 billion investment in xAI converted into SpaceX shares — a stake under 1% — after ...
Tesla's Q1 2026 materials describe Terafab, a project it is pursuing with SpaceX, as a massive semiconductor fab concept aimed at vertically integrating logic, memory, and advanced packaging.
Talk of combining Tesla and SpaceX has grown more concrete since the rocket company’s blockbuster listing, as Musk increasingly treats his ventures as one interlocking empire. He hinted at that convergence on Tesla’s latest earnings call. Musk spoke of “more and more overlap, especially with Terafab” before stopping himself and deferring to the company’s general counsel, citing proper procedure.
Another, and perhaps even more ... intertwined, for example through the Terafab project, in which both firms plan to jointly build chip factories....
A potential Tesla - SpaceX (SPCX) ... The Terafab collaboration would be the most tangible near-term synergy, with potential chip cost savings of well over $1T by 2050 relative to external sourcing, the firm added....
Think of this shared entity as "Frontier Systems"—a substantial expansion of the collaborative framework the companies have already established with the Terafab initiative. Through carefully scoped licensing and service agreements, this joint venture could develop the core technologies both companies rely on heavily. This includes AI chips, massive compute infrastructure, advanced batteries, robotics, and next-generation manufacturing capabilities.
The companies are also jointly developing Terafab, a semiconductor manufacturing project intended to produce chips for Tesla vehicles, robots and SpaceX’s computing requirements, according to Tesla’s quarterly update. SpaceX had already consolidated another Musk-controlled business this year, acquiring artificial-intelligence company xAI in February, according to a company announcement...
He added that there is "more and more overlap" between the companies, particularly citing Terafab, a joint semiconductor manufacturing project involving Tesla, SpaceX, and artificial intelligence startup xAI.
Terafab is a joint-venture semiconductor manufacturing project between Tesla, SpaceX, and artificial intelligence (AI) start-up xAI. It represents arguably the biggest connection between Tesla and SpaceX, but far from the only one.
Austin, TX, United States · On-site · Full-time · Junior Level (1-3 years) Apply to Job · We are building Terafab, a vertically integrated semiconductor factory at an unprecedented scale.
Elon Musk is moving ahead with a planned TeraFab semiconductor plant in Grimes County, Texas, with an estimated initial investment of US$119b and support from chip-equipment supplier ASML.
Because massive high-tech plants require substantial, specialized thermal cooling utilities to operate, localizing a primary supplier right in Terafab’s backyard could yield massive logistical and shipping cost savings.
At the same time, Musk has admitted that scaling its Optimus robots will be difficult. It still faces technical challenges, and there is no supply chain in place, given how new the robots' parts are. Tesla also has another big project with its Terafab megafoundry, but manufacturing advanced chips is difficult, and even Nvidia Chief Executive Officer Jensen Huang warned Musk that it would be nearly impossible to match Taiwan Semiconductor Manufacturing's capabilities.