On March 23, 2026, Reuters reported that CEO Elon Musk said the day before that Tesla, Inc. (NASDAQ:TSLA) and SpaceX aim to establish two advanced chip factories in Austin, Texas, as part of the “Terafab” project.
Elon Musk introduced his ambitious Terafab vision last week, aiming to produce a staggering terawatt of computing capacity annually. In contrast, the world’s current AI computing capacity is only around 20 gigawatts—about 2% of Musk’s projected needs.
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Obviously, building an entire industrial AI-driven space economy would be a massive undertaking, and that is why Terafab will be required to meet those ambitions.
It’s less about building more factories and more about making the ones they have work better. There’s also a big emphasis on tighter software-hardware integration right from the start, aiming to dodge post-delivery fixes and recalls—even as the broader economy keeps everyone guessing.
Elon Musk, CEO of Tesla, announced in mid-March that he would launch the Terafab megafab project within seven days, and on March 21 confirmed that the facility will be built in Austin, Texas. While many remain skeptical, industry forum SemiWiki offers an alternative perspective.
The bank estimates that developing an initial 100,000 wafer-per-month capacity could require more than $60 billion in capital expenditure. Even at full utilization, Terafab’s production costs are expected to exceed those of TSMC’s advanced nodes, with wafer costs potentially 30% to 50% higher.
Analysts note that building a competitive semiconductor foundry from scratch is among the most complex industrial challenges. Market leaders such as TSMC and Samsung Electronics benefit from decades of accumulated expertise, vast capital investment and deeply embedded supply chain ecosystems. In contrast, Terafab would begin with limited manufacturing experience and lack critical infrastructure, including advanced electronic design automation tools and established intellectual property libraries
The project is intended to build advanced chips at very large scale for Tesla, SpaceX, and xAI. Terafab is positioned as a potential competitor to Taiwan Semiconductor Manufacturing (NYSE:TSM) in AI and high end chip supply.
Tesla has posted jobs in Palo Alto and Austin, including a California opening for a lithography process engineer at $88,000 to $240,000 and process integration roles tied to advanced logic, with base pay up to $338,280.
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According to job listings, Tesla ... offering base salaries of $88,000 to $240,000 for module process engineers, and $88,000 to $338,280 for logic chip integration specialists....
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Theoretically, a Terafab producing 50 times the amount of chips TSMC makes would cost some $6 trillion in capital spending alone. Even assuming Musk finds some incredible way to produce chips twice as efficiently as the most efficient chip producer today, that would still be a $3 trillion ...
Speaking about the initiative, Musk introduced the concept of “Terafab,” a facility he said would be jointly operated by the two companies. The plant is expected to be constructed near Tesla’s headquarters in Austin, Texas, according to a report by Bloomberg.
Positive Sentiment: TeraFab / AI chip narrative draws bullish analyst support — Wedbush and others continue to call Tesla an emerging AI/semiconductor play after the Terafab chip-factory effort, which boosts the company’s long-term “physical AI” thesis. Dan Ives: Terafab Upside
From pv magazine USA California-based engineering and construction technology firm Terabase Energy says its new Terafab V2 automated solar array construction system has completed field testing and is ready for commercial service.