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During the earnings call, Musk talked up Tesla's Terafab ambitions but gave little detail other than calling it an "amazing initiative" and confirming that equipment orders had been placed for the development fab in Austin. ... "It's intended to have lithography mask production, and then logic, memory and packaging, and chip testing all under one roof," he said.
Musk said Tesla’s proposed Terafab semiconductor initiative is aimed at developing advanced AI chips for Optimus, while also confirming SpaceX is involved in the effort.
He predicted spending would ramp up in the next 2-3 years as the company builds a new solar panel factory, installs more AI compute, and breaks ground on a massive 'Terafab' semiconductor fab that Tesla is building with SpaceX.
The Grok chatbot is embedded in Tesla vehicles, Tesla is supplying batteries and manufacturing know-how to SpaceX, and Terafab is a jointly relevant AI chip facility. Q1 disclosures flagged a semiconductor fab under construction in Austin, and Tesla ...
Tesla already supplies batteries and manufacturing technologies for some SpaceX projects, while the companies are also jointly developing Terafab, a semiconductor manufacturing facility designed to produce AI chips.
“Well, 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,” Musk said.
TERAFAB: Tesla confirmed development of a dedicated AI chip fabrication facility involving SpaceX and xAI, targeting specialised AI logic and memory chips at an estimated cost of $20 billion.
Musk said Starlink could prevent autonomous vehicles from entering “Bermuda Triangles” of poor cellular coverage, while Grok, Digital Optimus and Terafab represent additional areas of collaboration. Musk said Starlink is being integrated into Cybercab and could eventually be added to other Tesla vehicles in markets where the satellite service operates.
Tesla disclosed that equipment orders have already been placed for an Austin development fab intended to combine lithography-mask production, logic, memory, packaging, and chip testing under 1 roof. Management described the configuration as designed to support extremely rapid iterative cycles for experimental AI chips. Terafab was characterized as necessary to prevent semiconductor availability from constraining Optimus production.
Musk says Tesla will "soon" reveal where it will build the Terafab, the company's massive, vertically integrated semiconductor project that it's building in collaboration with SpaceX and Intel.
Texas Instruments offers the cleanest exposure at a premium price, backed by an already-built U.S. fab base, $6.53 billion in TTM free cash flow, and quarterly CHIPS Act inflows. Intel is the highest-risk, highest-conviction play. A U.S. government equity stake, NVIDIA’s investment, the Terafab consortium with SpaceX, xAI, and Tesla, and the 18A ramp are all converging inside the same 12-month window.
Both Intel and Samsung are making progress chipping away at TMSC's lead. Intel and its Intel 14A process node are involved in Elon Musk's Terafab project, and the Wall Street Journal reported in May that Apple reached a preliminary deal to use Intel for manufacturing some chips.
The two companies already work together on a lot, including the integration of SpaceXAI’s Grok chatbot into Tesla’s vehicles and a giant join-venture chip factory in Texas called the Terafab.
The site of the demolished Gibbons Creek Power Plant in Grimes County, about 15 miles east of College Station, is seen on June 7. The site and surrounding area are the approximate location of the proposed SpaceX Terafab semiconductor chip manufacturing plant.Jay Janner/Austin American-Statesman
To address long-standing chip supply ... semiconductor production initiative called "Terafab," aiming to manufacture computing and memory chips at an unprecedented scale....
When asked whether there could be synergies from merging the two companies, Elon Musk responded, "Well, as you can see, SpaceX and Tesla are collaborating in various ways across multiple areas, and in that process, more and more aspects are overlapping. In particular, Terafab will become a truly massive project." Musk then paused briefly before adding, "Of course, we cannot discuss company mergers during a call like this; it must go through proper procedures," thereby hinting
Tesla confirms equipment orders for TeraFab, targets in-house chip production to break supply bottleneck Electric Vehicles ... With SpaceX's first public earnings report approaching, investors are looking for fresh insight into the company's operations and future satellite deployment plans, viewing the results as an important barometer for the global satellite communications market.
Tesla already supplies batteries and manufacturing technologies for some SpaceX projects, while the companies are jointly developing Terafab, a semiconductor manufacturing facility designed to produce AI chips.
Tesla's AI5 chip "will initially go into Optimus," ahead of the cars. And Musk said Tesla expects "to announce a location soon" for its Terafab chip plant, "without which we will be constrained in our ability to scale Optimus production, because we simply won't have enough AI chips."
The site of the demolished Gibbons Creek Power Plant in Grimes County, about 15 miles east of College Station, is seen on June 7. The site and surrounding area are the approximate location of the proposed SpaceX Terafab semiconductor chip manufacturing plant. (Jay Janner/Austin American-Statesman)