Tesla and SpaceX will build a massive semiconductor manufacturing plant near Austin, Texas, named Terafab. The facility aims to produce custom artificial intelligence chips with an annual computing power of one terawatt. Elon Musk estimates the project will cost between $20 billion and $25 billion.
Tesla has not yet included these costs in its 2026 capital expenditure plans. The venture seeks to bypass suppliers like TSMC and Samsung to meet internal demand for AI, robotics, and autonomous vehicles. This strategy reduces reliance on third-party foundries to control the hardware stack for projects like xAI’s Grok. The move signals a shift in the semiconductor supply chain and increases competition for established chip designers.