He said the so-called "Terafab" will have two facilities: one focused on AI chips for Tesla's electric vehicles and Optimus humanoid robots; while the other will be focused on AI chips for space-based data centers made by SpaceX.
Ives believes that the recent joint announcement by SpaceX and Tesla to build the Terafab megafactory further deepens the integration of their operations.
A recently issued research note ... by 2027. Ives argues that the groundwork is already actively being laid and points to the newly announced Terafab project as the ultimate catalyst for this historic combination....
A recently issued research note ... by 2027. Ives argues that the groundwork is already actively being laid and points to the newly announced Terafab project as the ultimate catalyst for this historic combination....
💸 Critics warn that Terafab could become a trillion-dollar boondoggle if costs, logistics, and legal frameworks aren't right. 🧠 Proponents see it as a stroke of genius that pushes the boundaries of energy, scalability, and sustainability.
Tech News News: Tesla CEO Elon Musk has unveiled his plans to build the ambitious Terafab semiconductor project in Austin, Texas, according to a report by Bloomberg. .
"Terafab will essentially be two fabs," Musk wrote in a post on X. Instead of one chip fab, Tesla and SpaceX would essentially have one each. While Tesla's fab would focus on chips for autonomous vehicles and robots, SpaceX's fab will build ...
According to the report, Terafab ... including limited manufacturing process expertise and a lack of supporting ecosystem elements such as electronic design automation tools and intellectual property libraries....
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry ... Ives calls Terafab the “first step” toward full operational integration.
Terafab looks like a chip factory. But it’s really an attempt to internalize one of the most important inputs in the AI economy. At $25 billion, this is a major capital commitment, even for Musk.
According to a post on TeslaAI's Weibo account, the TERAFAB project was officially launched and is expected to achieve computing power output of more than 1 terawatt (1 TW) per year. Musk predicts that the humanoid robot industry could potentially reach an annual production volume of 1 billion ...
The prototype facility will be built at Tesla's existing GigaTexas site in Austin. Its defining capability is vertical integration chip design, lithography, fabrication, memory production, advanced packaging and testing all under one roof.
Terafab wants to build a cutting-edge manufacturing network that can supply massive volumes of high-end chips. This project shines a light on just how critical AI and high-performance computing capacity have become. Musk’s teams could end up challenging established foundries in AI chip supply. It’s a big bet, given the huge capital, long lead times, and deep expertise you need to build such an ecosystem. Right now, TSMC holds the crown as the dominant pure-play foundry.
Musk also suggested that Terafab’s production capacity could surpass existing foundry facilities. According to his explanation, Terafab aims for production capabilities larger than TSMC’s “Gigafab,” which produces 100,000 wafers per month.
The company announced plans to develop orbital data centers, as well as the Terafab project—a facility for producing chips for AI, robotics, and space infrastructure in Austin, involving both Tesla and SpaceX.
The survey identifies three primary blockers: data preparation/availability for AI (74%), governance and compliance concerns (48%), and software interoperability challenges (42%).
The Terafab chip fabs fit that vision, but in the near term they mainly reinforce an existing key catalyst (software and robotaxi progress) while amplifying a major risk: materially higher capital spending and execution complexity in already ambitious AI and robotics plans.
Tesla’s Terafab division is also hiring process integration engineers to build advanced logic chips, with base salaries ranging from $88,000 to $338,280.
Musk said 80 percent of Terafab's compute output would flow to space-based applications, with 20 percent directed at terrestrial use. The orbital ambition connects directly to the February 2026 SpaceX-xAI merger. The SpaceX acquisition of xAI closed in early February 2026, creating a combined entity valued around $1.25 trillion and formalizing Musk's consolidation of rockets, satellites, AI infrastructure, and data platforms.