Elon Musk announced on March 22, 2026, that Tesla and SpaceX will jointly build a large-scale chip manufacturing facility in Austin, Texas. Known as the Terafab, the project also involves Musk’s AI venture, xAI.
The facility will produce semiconductors for robotics, artificial intelligence, and space-based data centers. Musk intends to address a massive demand for computing power that he believes current suppliers cannot satisfy.
The project aims to vertically integrate the entire chip development process from design to manufacturing and testing. The facility will eventually scale to support one terawatt of computing power per year.
This initiative represents a major strategic shift for Tesla as it moves deeper into the technology supply chain. The capital commitment targets future growth in autonomy and AI.