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The chip plans sit inside Musk's broader semiconductor push. The company’s proposed Terafab project would involve Tesla, SpaceX, xAI and Intel Corp.
Tesla and xAI already collaborate on Tesla's Full Self-Driving technology, and xAI's Grok is integrated into Tesla vehicles and Optimus robots. Meanwhile, xAI buys energy storage systems from Tesla, and the companies are collaborating on a chip manufacturing initiative called Terafab.
Tesla holds a stake in SpaceX, the two are jointly developing a chip manufacturing project called Terafab, and SpaceX spent $131 million on Cybertrucks in 2025, according to SpaceX's IPO filing.
TeraFab delivers a major win for U.S. semiconductor sovereignty. Musk has repeatedly highlighted geopolitical risks, noting that reliance on overseas fabs—particularly in Taiwan—leaves critical technologies vulnerable to conflict or export controls. A domestic facility of this magnitude directly supports the goals of the CHIPS and Science Act by expanding advanced-node manufacturing capacity on American soil.
"Rubin ramp at xAI is perhaps the reason for Google and Anthropic approaching xAI with large multi-year contracts," it noted, pointing to a combined $75 billion in agreements between xAI and the two companies. On the semiconductor equipment side, Lynx sees Lam Research, Applied Materials, ASML, and KLA as key beneficiaries of Terafab’s buildout, with wafer fabrication equipment demand of roughly $25 to $30 billion expected over 2027-28.
TeraFab, Elon Musk, ASML, semiconductor manufacturing, High-NA EUV, Intel 14A, 2nm chips, AI compute, chip shortage, Christophe Fouquet.
Kwak boosts Hanmi Semiconductor stake, signals confidence in Terafab supply Chairman Kwak Dong-shin of HANMI Semiconductor disclosed on the 16th that
ASML shares slipped 0.44% to €1,501.80 after a sharp AI-fueled rally, as investors shift focus from Elon Musk’s Terafab praise to whether it will drive real equipment
The rest of the valuation is a wager on terminal value, on a future still over the horizon. Server farms in orbit carried up by a Starship that is running behind. A chip plant Musk has nicknamed the Terafab and has not yet been built. Settlements on Mars.
“Texas is where the integrated ... Abbott, said in a statement. Elon Musk's company is building Terafab to create chips for its Starlink broadband internet satellites and other future projects....
ATX companies on Fortune 500 list help push Texas past California · Samsung driving an Austin-area explosion of Asian business investment · Kyle company now supplying Samsung's Taylor fab as operations ramp up · Musk-linked entity buys likely Terafab site near College Station
“Texas is where the integrated circuit was born and where the future of the semiconductor industry is being built,” Andrew Mahaleris, press secretary for Gov. Greg Abbott, said in a statement. Elon Musk’s company is building Terafab to create chips for its Starlink broadband internet ...
Elon Musk has revealed plans for ... but they would both be small compared to Musk's planned Terafab factory even farther out in rural Texas.Screenshot of X · By Justin Sayers – Senior Staff Writer, Austin Business Journal...
Musk appears to be trying to move beyond buying chips from the current semiconductor ecosystem and toward owning more of the production chain. That would put Terafab in potential competition with major foundry players such as TSMC, though catching up on yield, scale, talent, and manufacturing know-how would be extremely difficult.
Given its importance to Terafab and its fantastic results, it may not come as much of a surprise, then, that Musk boasted about the company. Recently, in a post on social media, he said, "ASML should be treasured and supported.
Tesla is working closely with Samsung, which will manufacture AI6 in Texas at its new semiconductor facility. Beyond that $16.5 billion chip manufacturing deal, Tesla has also partnered with Intel and SpaceX on the TERAFAB AI chip project to vertically integrate semiconductor production.
Simultaneously, the company is advancing more than six chip projects, including AI series, Dojo series, and SpaceX-specific chips, while also pursuing vertical integration involving photomask design, logic, memory chips, and advanced packaging processes. The scale of single-site integration is unprecedented in the industry. Time Pressure: Terafab's design cycle is only nine months, significantly shorter than the industry's typical 18- to 24-month development cycle, with complex designs
On the night of March 21, 2026, Musk posted to X: “Formal announcement of the TERAFAB project, which will be done jointly by SpaceX and Tesla,…
In May, SpaceX announced plans to invest $55 billion to build a "Terafab" semiconductor factory in Texas, producing chips for artificial intelligence as well as robotics.
I think over time, there's going to be a lot of technology evolution with the TeraFab. But fundamentally, it's about scale.” Part of SpaceX's AI push The orbital computing initiative forms part of Musk's broader strategy to strengthen SpaceX's position in the artificial intelligence sector. Rather than focusing solely on AI applications, the company is increasingly investing in the infrastructure required to power them, including chips, energy systems and data centres.