Elon Musk unveiled an ambitious plan March 21, 2026, for a joint Tesla and SpaceX semiconductor fabrication facility dubbed "Terafab," aiming to produce custom chips on an unprecedented scale to fuel artificial intelligence, humanoid robotics, autonomous vehicles and space-based computing. The $20-25 billion project, described by Musk as "the most epic chip-building exercise in history by far," seeks to address what he calls critical shortages in global chip supply amid surging demand from his companies.
Speaking at an event in downtown Austin's defunct Seaholm Power Plant on Saturday night, Musk outlined the venture as a collaboration between Tesla, SpaceX and xAI. The facility will start with an "advanced technology fab" near Tesla's existing Gigafactory in eastern Travis County, equipped to design, manufacture and test semiconductors of any kind. Musk emphasized vertical integration, stating current global production meets only a fraction—around 3%—of his companies' projected needs for AI and robotics hardware.
